Breaking the news. Is Iqbal stripping Independent's assets?
If Iqbal Survé is stripping the profitable arms out of Independent Media, it could be detrimental to shareholders — including government pensioners
Growing in the shadows of the once formidable Independent Media is an opaque company, seemingly controlled by Iqbal Survé, that claims it is defying the generally accepted narrative of a struggling media industry.
This company, African Media Development (AMD), has swooped out of nowhere to buy Independent Media’s profitable community newspaper division, and is also thought to have become the recent proud owner of other “business units” that were formerly part of the media company.
In early February, staff of the community newspapers were told at a meeting that the division had been sold to a company with a “long history” in media — AMD.
Apart from Sandy Naudé, previously head of Independent’s Cape division and now set to head the new entity, and group executive Howard Plaatjes, none of the staff at the meeting knew anything about the media company with the “long history”.
No detail was provided about the price paid for the only newspaper division within Independent Media making any profit. In fact, the only thing staff were told was that AMD’s majority shareholder was Sekunjalo.
However, this would suggest a related-party deal, as the colourful businessman Survé is the executive chairman of both Independent Media and Sekunjalo.
The parties who financed the R2bn acquisition of Independent appear unaware or unconcerned about the asset restructuring going on
Yet the apparent sale of the community newspaper division to one of Survé’s own companies has deeper implications for Independent Media’s other shareholders, which include government pensioners.
As far as anyone knows, Independent Media is 55% owned by the Sekunjalo Independent Media consortium (led by Survé’s Sekunjalo Investment Holdings), the Public Investment Corp (PIC) holds 25%, and a Chinese consortium 20%.
If Survé is stripping out the profitable arms of Independent, this would seem to be detrimental to the other shareholders, including the government employees, who remain saddled with the less-profitable parts of the business.
Sekunjalo also owns a company called African News Agency (ANA), which was launched in March 2015 after the demise of the SA Press Agency (Sapa).
Last week, Independent Media reported that ANA had raised US$80m from unidentified sources in China, the US and the Middle East.
ANA describes itself as “Africa’s first content-syndication service” and it claims, as of three months ago, that it has reached more than 1bn users. That it can make such outlandish claims is largely due to partners with which it has reciprocal arrangements, including China’s Xinhua News.
The dramatic (though unaudited) pace of its alleged growth seems all the more incredible, given a revolving door in key management positions. In recent times, ANA founding chairman Ladislas Agbesi has been replaced by Arthur Mutambara and founding CEO Chris Borain has been replaced by Grant Fredericks.
“With this [$80m] investment ANA has in total raised $165m since its inception,” Independent Media said last week. The media company then went on to report how Sekunjalo is now one of the most valuable media investors in the country.
“The total placing has resulted in 15% of the shareholding now held by international investors and 85% of shares belonging to the Sekunjalo Group.”
This puts the value of the Sekunjalo Group’s stake in ANA at just under $1bn — an immensely steep valuation. It is puzzling, given that Sapa had little value when it closed shop three years ago.
However, even though government pensions are on the line at Independent Media, there is little communication about what is going on at the company.
No detail has been publicly disclosed about the price paid for Independent’s community newspapers, and Naudé did not respond to requests for comment.
The value of the Sekunjalo Group’s stake in ANA is puzzling, given that Sapa had little value when it closed shop three years ago
At the same time, reports have emerged that Independent Media’s 50% share of Allied Publishing (a joint venture with Times Media, which owns this publication) has also been stripped out of Independent Media and is now part of Sekunjalo.
Allied distributes newspapers and magazines for both media companies.
Industry sources told the Financial Mail that pivotal functions within Independent — such as editorial, subediting and IT — have been organised into self-contained business units.
These business units are now charging Independent’s newspaper titles for those services. However, it is unclear whether the business units are still part of Independent or have also been stripped out and are now part of the Sekunjalo Group.
All of the restructuring means it’s now impossible to know what assets are left in Independent Media, which was valued at R2bn as recently as 2013.
Remarkably, the parties who financed that R2bn acquisition of Independent appear to be either unaware or unconcerned about the asset restructuring going on within the company.
The largest provider of funding was the PIC, which means it has the most to lose. If the assets are being sold, not only does this leave a cloud over the current value of the PIC’s initial R166m investment in Independent, but it also raises questions over the media company’s ability to repay the loans taken out to buy the company, which stood at R1bn a year ago.
The PIC has a representative on Independent Media’s board of directors. Despite a number of approaches, the PIC had not provided comments by the time the Financial Mail went to press.
The SA Clothing & Textile Workers’ Union (Sactwu) is thought to have paid more than R100m in 2013 for a stake in Independent Media, as part of the Sekunjalo Independent Media consortium. But Sactwu also seems unaware of the restructuring.
In one of the more intriguing aspects of this battle, another party that could be hard-hit by the restructuring is Oakbay Investments, which is owned by the equally controversial Gupta family.
Oakbay has taken Survé to court, demanding 27.5% in Sekunjalo Independent Media consortium, which it says Survé agreed to give it back in 2012. The two parties are due to go head-to-head in the high court next month.
In early 2013, Oakbay apparently handed cash to Survé to secure a stake in the Byzantine Independent Media control structure, as he was negotiating to buy the company from the former Irish owners, the Independent Group.
The plan at the time was that Oakbay would get 50% of the Sekunjalo Group’s stake in Independent Media. From the outside, it is impossible to say if Survé ever had any intention of completing that transaction or whether Oakbay was just one of the many parties corralled into his hastily constructed consortium.
In June 2013, when the list of shareholders in the consortium (which would own 55% of the media company) was disclosed, Oakbay wasn’t among them.
Instead, that list included Sekunjalo Investment Holdings, Cosatu investment company Kopano ke Matla, Sactwu Investments, the Food & Allied Workers’ Union (Fawu) and a special-purpose vehicle housing a 10% stake for employees. These various parties would hold a combined 63% of the Sekunjalo Independent Media consortium.
The other 37% supposedly comprised “a number of broad-based value-adding partners”, including the Black Business Chamber (Western Cape), Mandla Mandela’s Mvezo Trust, the Western Cape Development Trust, Umkhonto we Sizwe Military Veterans Association, various unnamed “women’s business community organisations” and prominent entrepreneurs Sandile Zungu and Groovin Nchabeleng.
However, some of those members of the consortium have told the Financial Mail they have no idea what happened to their promised shares.
Says Fawu general secretary Katishi Masemola: “I haven’t heard anything about it since we were offered a very small stake years ago. We still haven’t signed any papers ...
we had no intention of paying anything and felt if we were getting it for free, there was no harm to us.”
Another group that was offered shares says it was impossible to know exactly what was going on back in 2013, because the names of the companies being used by Survé’s consortium kept changing. “There were companies within companies so it was impossible to know who was being offered what,” a source at that group says.
At the time, Independent Media’s staff were also promised great wealth by incoming chairman Survé at various staff meetings. Since then, the staff numbers have been pared back by retrenchments and there has been no sign of shares.
One of the companies offered shares at the outset says the only thing that can be said with any certainty is that Sekunjalo looks set to score by feeding off the demise of the print media industry.
* This article was amended on March 10 2017 to correct the name of Africa Media Group to African Media Development.