Ummango Investment Holdings, a women's broad-based black empowerment consortium, financed by Tokyo Sexwale's Mvelaphanda, has bought a 25.1% stake in ITWeb.
The value of the deal has not been disclosed. However, ITWeb's founder and CEO, Jovan Regasek, says Ummango paid fair value for the shares.
In empowerment deals, shares are often sold at a discount to the prospective BEE partner and the discount usually comes at the expense of the current shareholders, he says. “In this case, our partner paid the market value for the shares.”
Ummango has acquired the shares from existing ITWeb shareholders, who agreed to lend a portion of the money back to the company in order to boost its cash position and prepare it for future growth.
“ITWeb plays a prominent role, not only in the media space, but within the ICT sector as well. This gives us an opportunity to complement our existing investments in the media sector and, at the same time, gain access to the ICT sector,” says Ummango CEO Tham-Tham Ndziba.
According to Mvelaphanda Holdings (Mvela) CEO Mark Willcox, the acquisition is in line with the consortium's growth strategy, which includes “making key acquisitions into niche players that dominate their sectors, including the media industry”.
Mvela funded Isingqi Investment Holdings in its 25.1% acquisition of MoneyWeb last year, as well as a commitment to buy 30% of Avusa (Johncom). Mvela already owns a stake in Business Century, publisher of niche business magazine Maverick. Outside the media space, Mvela has also purchased a stake in technology supplier Sahara.
According to Regasek, ITWeb's new empowerment partner has plans for the media industry that fall into his vision of ITWeb's future. “If one looks at Mvela's other media acquisitions, it's not hard to see where they are going.”
Regasek says the acquisition represents the first and most crucial steps in ITWeb's transformation. “We are acquiring significant empowerment credentials and a long-term, supportive BEE shareholder, committed to growing the business.”
However, he points out that even without its BEE dimension, as a pure business transaction, the deal makes perfect sense for the company. “We share the same outlook for the future of ITWeb and the future of the media sector in SA, and this is the best part of the partnership.”