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Remgro swells CIVH shareholding in R3.7bn rights offer

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Community Investment Ventures Holdings CEO Raymond Ndlovu.
Community Investment Ventures Holdings CEO Raymond Ndlovu.

JSE-listed investment group Remgro is set to increase its shareholding in Community Investment Ventures Holdings (CIVH) after participating in the company’s rights offer to raise R3.7 billion.

CIVH is raising fresh capital from its shareholders, which will be used to build up operations and offset debt.

Remgro currently holds 55.2% in CIVH and will now increase it to 55.5% after the rights offer.

CIVH, which is now valued at R23 billion, issued a notice in May inviting all its shareholders to participate in a rights offer it was undertaking to raise an aggregate amount of R3.7 billion, saying the rights offer was made at 20% of the valuation price.

Yesterday, Remgro announced that through its wholly-owned subsidiary Industrial Electronic Investments (IEI), its proportionate share of the second rights offer shares will be issued for an aggregate subscription price of R2 billion.

“Remgro has resolved to take up all its rights in terms of the second tranche rights offer (STRO), namely to (i) subscribe for its proportionate share of the STRO shares, and (ii) over-subscribe for 10 104 further STRO shares up to a maximum amount of R319 million through IEI.

“Remgro will effect payment of the aggregate subscription amount due on 19 July 2021,” the company announced to shareholders yesterday.

CIVH, which is led by CEO Raymond Ndlovu, is active in the telecommunications and information technology sectors.

The group’s major operating companies are Dark Fibre Africa (DFA) and Vumatel, which constructs and owns fibre-optic networks.

DFA has deployed over 16 000km of ducting infrastructure in major South African metros, secondary cities and smaller towns. The company says its network runs with an uptime of 99.98%.

Vumatel pioneered fibre-to-the-home in SA and has since connected thousands of homes across Johannesburg, Cape Town and Durban to fibre internet. The company, which has a footprint in excess of 600 000 homes, anticipates there are at least a further 700 000 homes in emerging markets.

Commenting on the developments, analyst Ofentse Dazela, director of pricing research at Africa Analysis, says CIVH’s ambitious future plans will require substantial capital injection in order to come to fruition, and some of these projects are already under way.

“While a portion of this capital injection will be utilised to repay all CIVH’s debt at the holding company level, which was previously incurred in support of the acquisition of Vumatel, most of it will probably support network rollout,” he says.

“As we all know, the COVID-19 pandemic saw a good portion of SA’s active workforce working from home. Thus, demand for faster and reliable connectivity at home has never been so great to support critical business operations. This is an opportunity that CIVH is looking to exploit by significantly ramping up network rollout in areas that have yet to receive fibre coverage.”

Notably, Dazela says, several deployments are already under way in the Eastern Cape, where Vumatel has started trenching in suburbs such as Allanridge West, Bethelsdorp, Humewood, Mdantsane, Morningside, North End, Phakamisa, Summerstrand and Weybridge Park.

“Vumatel further plans to roll out in many less affluent areas in that province, to cover small cities, suburbs and townships, such as King Williams Town, Kwadwesi, Levyvale, Mdantsane, Meyersrus, Mosel, Ndevana, Pari Park, Rosedale and Zwelitsha, among others.

“So the addressable market remains big with other big projects taking place in cities such as Bloemfontein, Cape Town, Pietermaritzburg and Port Elizabeth.”

Furthermore, Dazela says, it must be highlighted that CIVH has big plans to expand beyond fibre.

“The company is also planning to invest in the wholesale open-access network, a new wireless infrastructure player envisaged by government, through which mobile data competition could be stimulated.

“Furthermore, CIVH is planning to establish a data centre business, which will require deep pockets to become a reality.”

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