Prime businesses: An entrance to the ANN7 Television and The New Age newspaper offices in Midrand. Mzwanele Manyi has snapped up the interests, which were owned by the Gupta family. Picture: REUTERS
Prime businesses: An entrance to the ANN7 Television and The New Age newspaper offices in Midrand. Mzwanele Manyi has snapped up the interests, which were owned by the Gupta family. Picture: REUTERS

The R450m paid by Mzwanele Manyi for the Guptas’ media interests — the ANN7 television channel and The New Age newspaper — appears to be far too much.

This is according to a valuation of Infinity Media Networks undertaken two years ago in October 2015 by accounting firm Cajee Razak & Associates. Infinity Media Networks is the company that housed the media interests of Gupta-owned Oakbay Investments.

This valued the company on the basis of the present value of future earnings at R52m for the value of the business enterprise and R41m for 100% equity value. The assets were valued on a fair market value basis.

Even though the business model of the firm might have changed in two years, it is difficult to imagine that its value could have soared about 10 times over this period, particularly in the midst of a downturn.

The acquisition was made by Manyi’s company, Lodidox, with R300m paid for the ANN7 news channel and R150m for a two-thirds stake in TNA Media, the publisher of The New Age. The deal is vendor financed through a loan from Oakbay Investments, which Manyi said was "on acceptable terms".

Manyi, the president of the Progressive Professionals Forum, was unfazed about the view that he might have paid too much, saying that the valuation did not take into account the excellent prospects of the businesses. He was not unhappy with the price paid, saying a lot depended on the assumptions made in the valuation and the reasons for which it was done.

Manyi is confident that the businesses will grow as they benefit from radical economic transformation, increased state advertising and broad-based black economic empowerment.

He said he would be "unapologetically" knocking on government doors for more advertising spend for his newspaper and television channel. He also aims to expand in Africa.

Manyi, who is a strong supporter of President Jacob Zuma, said in an interview "things can’t get worse than they are now, it can only get better" in terms of the companies acquired.

He said he had an aggressive business plan.

"I am very confident that the radical economic transformation of government should benefit this. I am that radical opportunity for them. I want to increase our market share in the government space," he said.

ensorl@businesslive.co.za