| Friday 24 December 2021 Good morning Voornaam,
This is the final edition of InceConnect for 2021 and there were very few announcements on the JSE yesterday, so it's the right time to take a break. We will be back on the morning of 5th January 2022.
Other than Ascendis and the work it needs to do in the next week to find a solution to its debt crisis, there are unlikely to be many fireworks on the market.
Back in May 2021, Finbond announced a deal to acquire up to 35% in Financiera Contigo in Mexico. Finbond has decided to walk away from the deal, blaming the "continued impact of Covid-19 on the Mexican economy" - I guess this was nacho ordinary transaction.
In significant news for ESG enthusiasts, AngloGold Ashanti has released its inaugural climate report. The company has committed to a target of net zero Scope 1 and 2 emission s by 2050, with accelerated actions on Scope 3 emissions. Back in 2008, the company set a goal of a 30% reduction in emissions intensity by 2022, which it achieved four years early in 2018. Mining is an energy-intensive business, so there are multiple ways to reduce emissions by investing in the latest technologies. Those interested in reading the 29-page report will find it here.
Grindrod Shipping has continued with its share repurchase programme, buying USD 1.7 million worth of shares between 9th and 17th December. During the fourth quarter of 2021, repurchases have totalled USD 10 million. Year-to-date, the company has repurchased 4.3% of its shares in issue.
After Wyloo offered to pay a much higher price for Canadian company Noront than BHP was willing to pay , that deal has fallen over and BHP has walked away. The only positive is that the support agreement between BHP and Noront has been cancelled, so Noront had to make a CAD 17.8 million termination payment to BHP. This is a perfect example of why such clauses exist in contracts.
Dipula Income Fund is in the process of trying to repurchase all Dipula A shares by way of a scheme of arrangement. The firm intention announcement was published on 15 October 2021. After engagement with shareholders, Dipula has amended the offer. There will no longer be a cash alternative available to shareholders. The swap ratio has increased from 2.2 Dipula B shares for every Dipula A share to 2.4 Dipula B shares. Furthermore, Dipula will no longer propose the Circus Triangle transaction. On this basis, Coronation (which holds 34.14% of Dipula A shares) has pledged its support for the deal. The Dipula A shares closed more than 6% higher on this news.
Sebata Holdings has released its interim results for the six months to September. Revenue fell nearly 45% to just R11.5 million and the headline loss per share was over 10x worse at -132.25 cents per share (vs. -12.78 cents per share in the comparable period). The major financial disaster in this result was the impairment of R401 million linked to the water and software deals with Inzalo in 2020. Sebata is concerned about the earn-outs being achieved and Inzalo's ability to raise funding to settle the purchase price.
There was no announcement by Prosus or Naspers on SENS, but I must highlight that Tencent announced that it will distribute most of its JD.com stake to its shareholders (Prosus holds just under 29% in Tencent). Tencent holds 17% in JD.com and will hold just 2.3% after the distribution, a divestment valued at over USD 16 billion. Tencent holds a huge portfolio of investments in Chinese companies, so the much bigger question is around whether we will see more unbundlings as Chinese regulators put pressure on tech companies to increase competition and reduce their power.
To finish off the year, the final Magic Markets podcast is a frank discussion on the winners and losers in our portfolios in 2021. Mohammed Nalla and I don't hide our mistakes; we highlight them in the pursuit of continuing learning. Anyone with experience in the markets knows that you never stop learning in this game. To see out the year, I highly recommend listening to the show.
Thank you for the wonderful support since I took over as Managing Editor of InceConnect in the middle of this year. I can't wait to make 2022 even better!
Be safe over the festive season, get some rest and give yourself some credit for surviving the numerous challenges that the world has thrown at all of us in the past year.
Have a beautiful Christmas!
The Finance Ghost
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