South African Government Said to Near Vodacom Sale to PIC

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South Africa is in talks to sell part or all of its stake in mobile phone company Vodacom Group Ltd. to the Public Investment Corp. to raise funds for the country’s power utility, two people familiar with the plans said.

While a deal hasn’t been completed, an agreement could be reached soon and the stake won’t be sold by the government at a significant premium or discount to the current share price, according to one of the people, who asked not to be identified because the proposal hasn’t been made public. The state’s 13.9 percent stake is worth about 26.6 billion rand ($2.1 billion).

South Africa is seeking to raise funds to help plug a 225 billion-rand shortfall at electricity provider Eskom Holdings SOC Ltd. amid regular blackouts. The National Treasury said on Thursday it will wait until transactions are completed before providing details of a sale of government assets, which are needed to finance a 23 billion-rand rescue package.

“Government has not said anything about the sale of a stake in Vodacom,” Phumza Macanda, a Treasury spokeswoman, said by phone on Friday. “Government has only said it is looking into the sale of a non-core asset.”

The PIC, Africa’s biggest money manager and owned by the South African government, already has 3.19 percent of Vodacom, and could become the company’s second-largest shareholder after U.K. carrier and 65 percent owner Vodafone Group Plc. A PIC spokesman said he couldn’t immediately respond. A spokesman for Vodacom declined to comment.

Rescue Package

Vodacom shares pared earlier gains and traded 0.2 percent lower at 127.74 rand as of 4:31 p.m. in Johannesburg, valuing the company at 191 billion rand.

Finance Minister Nhlanhla Nene this week submitted to parliament the Eskom Appropriation Bill that enables the government to allocate the 23 billion rand bailout to the utility. A Vodacom stake sale could be done “at an opportune time,” Nene said in an interview with Bloomberg TV’s Anna Edwards on Thursday. Details of asset sales could be published at the end of this month, he said.

He declined to comment on whether the sale will be to the PIC when responding to separate questions later.

The PIC manages the majority of South African government worker pension funds and its investments account for about 13 percent of the market capitalization of stocks traded in Johannesburg, according to its website. It manages about 1.4 trillion rand in total.

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