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The Department of Public Enterprises (DPE) has defended its due diligence of the Takatso consortium, selected to be the strategic equity partner for the currently State-owned national flag carrier, South African Airways (SAA). It has also expressed confidence in Takatso majority shareholder Harith General Partners (Harith) and minority partners Syranix and Global Aviation.
The DPE, in its statement, affirmed that it had “followed a fair and transparent process” to identify an SEP for SAA, once the airline had exited business rescue. A SEP was needed to strengthen the airline’s competitiveness in a very tough market, and keeping it commercially viable, as well as sustainable. This would allow the carrier to contribute to the national economy, instead of being a drain on the fiscus.
“DPE is satisfied in Takatso as the SEP, particularly with Harith’s interest in growing its transport platform, particularly in aviation, to complement existing related assets,” stated the DPE. “DPE is satisfied with Takatso shareholders’ track record of building a portfolio of assets across the continent, contributing to the African narrative of large-scale, impactful infrastructure projects. Shareholders have provided the necessary financial, empowerment, technical, and governance credentials.”
The department noted that Harith (founded in 2007) currently managed assets worth more than $1-billion and had, during its existence, “mobilised” $3.4-billion in investments, from both African and global investors. Harith had already invested in South Africa’s only privately-owned international airport, Lanseria. Other major projects that it had investments in included Africa’s largest wind energy plant, at Lake Turkana in Kenya, and the Henri Konan Bédié expressway bridge in Abidjan, in the Côte d’Ivoire. It had also invested in South African holding company Community Investment Ventures Holdings (part of the Remgro group), which owned two leading South African open-access fibre network infrastructure and connectivity provision enterprises (Dark Fibre Africa, better known as DFA, and Vumatel).
Global Aviation and Syranix were the partners behind Lift, which operated the Lift low-cost airline. But, although Lift had only been launched shortly before DPE started its due diligence on Takatso, Global Aviation had 20 years of experience of operating in the aviation ‘wet lease’ market (that is, leasing a customer both an aircraft and its crew).
SAA had been valued by independent third-party companies. The value of a business varied over time, due to changing circumstances, and more than one valuation of SAA had been undertaken, including on behalf of Takatso. The agreement, under which the consortium would buy 51% of SAA, included an adjustment mechanism to deal with any potential overstatements and/or understatements of assets not listed in the asset register.
“Regarding the outstanding R3.5-billion required to finalise the business rescue process, the Minister of Finance allocated R1-billion in the February Budget speech, with the outstanding amount to be provided by the Government,” assured the DPE.