Investment firm seeks role in Telkom, Vodacom
September 14, 2009
By Thabiso Mochiko
The investment group Convergence Partners would be prepared to renegotiate its participation in Vodacom and Telkom as part of its strategy to be actively involved in companies that it invested in, chief executive Brandon Doyle said last week.
Convergence Partners, formed in 2006 by Andile Ngcaba and business partner Doyle, owns less than 5 percent in Vodacom and Telkom through the Elephant Consortium, a black economic empowerment (BEE) group.
The firm has rapidly moved away from the traditional black empowerment model and from investing only in existing companies.
"Our deal flow was originally primarily driven by BEE, but now we are taking more primary type of investments, and especially developing our own projects" Doyle said.
The firm is also playing a more active role in telecoms and media companies that it invests in by developing and identifying new opportunities for those companies.
It has indirect and direct shareholding in 16 companies, including the recently acquired 68.5 percent in Mozambican-based internet service provider Intra Lda, held together with Internet Solutions.
Doyle said this week that Telkom and Vodacom were the only passive investments in the Convergence stable and constituted only 10 percent of the entire portfolio.
Although Convergence had not decided whether it would sell its shares in Telkom and Vodacom when the repayment period of its debts expired next year, it still saw growth opportunities in those companies.
Convergence is part of the Elephant Consortium that bought a 15.1 percent stake in Telkom in 2004 and still owes R3 billion that it has to repay by next year.
But the Public Investment Corporation, which financed the deal, retained half of the stake, leaving Elephant with about 7 percent in Telkom.
"At some point we will hold discussions and the type of relationship that we have will have to change," Doyle said.
The group's new strategy is to invest fresh equity capital into companies to assist them expand their businesses.
It would buy into an internet service provider in Tanzania as part of its east Africa expansion plans and assist it to build a wireless network that will be linked to the Seacom cable. Convergence Partners would make an announcement in the next two weeks about the Tanzanian deal.
The investment company has identified 20 countries, including Egypt, Nigeria, Morocco, Rwanda and Algeria, that it wants to operate in, mainly by providing telecommunications infrastructure.
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