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South Africa’s IDC Delays Planned 26 Billion-Rand Share Sale

South Africa’s Industrial Development Corp., which owns stakes in Sasol Ltd. (SOL) and Kumba Iron Ore Ltd. (KIO), delayed plans to sell about 26 billion rand ($3.9 billion) of shares to fund new investments because it doesn’t need the money, Chief Executive Officer Geoffrey Qhena said.

The IDC, a state-owned lender, said on Sept. 14 that it expected to lend between 105 billion rand and 129 billion rand over the next five years and that it would need to raise between 53 billion rand and 64 billion rand in funding.

While the IDC intended to start selling shares in the year through March, none were sold, Qhena said in an interview in Cape Town yesterday. Some shares will be sold in the current fiscal year with the timing “determined by the pace at which we invest,” Qhena said, declining to comment further.

“We don’t want to sell and keep the cash,” he said. “We have put in a 15 billion rand medium-term note program which we can tap” if funds are needed.

The IDC, based in Johannesburg, owned 7.9 percent of ArcelorMittal South Africa Ltd. (ACL), a steelmaker, and 12.9 percent of Kumba, an iron ore producer, as of April last year, according to Bloomberg data. As of November, it also owned about 8 percent of Sasol, the largest producer of motor fuels made from coal and gas, the data shows.

According to the company’s annual report for the year through March, 2010, it owns 30 percent of York Timber Holdings Ltd. (YRK), a lumber producer, and 22 percent of Merafe Resources Ltd. (MRF), a ferrochrome maker.

Investment Plans

Economic Development Minister Ebrahim Patel said today that the IDC will provide 102 billion rand in funding for projects with potential to create jobs and expand the economy over the next five years, up from a previous forecast of 66 billion rand.

“This is a dramatic improvement in available funding, made possible by greater use of the strong balance sheet of the IDC,” Patel told lawmakers in Cape Town. The interest rate charged on “on new IDC loans will be up to 100 basis points lower for high development impact investments” than charged by banks.

About 22.4 billion rand will be invested in “green industries” such as alternative energy projects, 22.1 billion rand in mining and mineral processing, 20.8 billion rand in manufacturing, 7.7 billion rand in agriculture and 14.8 billion rand in tourism.

The IDC intends to help fund a train carriage manufacturing business with the potential to employ 3,000 people and a chicken producing project that may create 1,300 jobs, Qhena said.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Andrew Barden at barden@bloomberg.net.

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