Sagarmatha eyes $4bn valuation in South Africa's first e-commerce IPO

3rd April 2018 By: Reuters

Sagarmatha Technologies, a South African company that owns newspapers, online shopping and classified platforms, is targeting a valuation of more than $4-billion in Johannesburg's first initial public offering of an e-commerce company.

Sagarmatha plans to raise R7.5-billion ($636-million) in a share placement of 189.3-million shares at R39.62 each, it said in a pre-listing filing on its website.

Investors are to include Jim Rogers, the longtime Asian bull and co-founder of hedge fund Quantum Fund.

Rogers has agreed to buy between R100-million and R150-million worth of shares while Harold Doley, who was the US representative to the African Development Bank during the 1980s and founder of US investment bank Doley Securities, has given a similar undertaking.

The results of the placement are to be issued later on Tuesday, it said.

The placement values the Cape Town-based company at nearly R50-billion, underpinned by one of the country's largest offering of newspapers that include The Star and The Sunday Independent.

Sagarmatha will tap the Johannesburg equity market as investors and business leaders bet newly elected President Cyril Ramaphosa will follow through on promises to revitalise the economy and push through business-friendly policies.

The listing, penciled in for this Friday, would reduce the stake of top shareholder Sekunjalo Investments, a company founded by medical doctor Iqbal Surve in the 1990s, to as little as 60% from 73%.

It would also give investors an alternative to Naspers, a 1.3-trillion rand giant that owes much of that valuation to its one-third stake in China's Tencent Holding despite running e-commerce platforms online retailer Takealot in South Africa and MakeMyTrip in India.

Sagarmatha said it would use R7.5-billion it hopes to raise from the sale of the 15% stake in the IPO to scale up its existing platforms, buy new ones, pay down debt and roll out regional offices in east Africa.

The company reported a loss before tax of R36-million in the 2016 fiscal year on revenue of R188.4-million.