The South African financial services firm , Ecsponent, is furthering its grip in the local market as it expands from the financial sector, this time around acquiring a business involved in agriculture, with sector expected to get a boost from government massive subsidies.
On Monday, the Johannesburg Stock Exchange listed Ecsponent announced that it will acquire a 45.5percent stake in Crosscorn, a local based company whose principal activity is the production, sale and distribution of seeds. The company has a market share in excess of 50 percent of the maize seed sales in Botswana, and sells close to half of the country’s sorghum, cowpeas and animal fodder seeds. Crosscorn is wholly owned by Scipion Active Trading Fund (SATF), a fund incorporated under the laws of the Cayman Islands.
Ecsponent said it would acquire Crosscorn shares in two phases. It would purchase 26.25 percent of shares in Crosscorn in exchange for a deferred cash consideration of $1.4 million. The financial behemoth would then acquire a further 19.25 percent of the shares in exchange for the issue of 101.3million Ecsponent shares.
Dirk van der Merwe, Ecsponent’s chief executive officer, said that the transaction would provide the company with an opportunity to acquire a strategic investment in Botswana with a satisfactory return profile.
“The transaction will also strengthen Ecsponent’s shareholder base while reinforcing its pan-African expansion strategy and unlocking value for Ecsponent in neighbouring territories,” Van der Merwe said.
The company’s move in Botswana’s agricultural sector might see it benefit also from government’s intention to ramp up support for the agricultural sector, which includes increasing subsidies for crop seeds and livestock feeds.
Ecsponent has in the past been part of various transactions on Botswana. In January this year, the company sold off its 50 percent stake in SureChoice – a micro lender based in Botswana – to MHMK Group Botswana Limited. This followed Ecsponent’s decision to acquire Solar Invest – a subsidiary of MHMK.
According to the particulars of the deal, Invest Solar Africa intends to list on the venture board of Botswana Stock Exchange, with subscribe for a maximum of 40 million shares in Invest Solar Africa at a subscription price of P1 per share.
Ecsponent will also underwrite and subscribe for all the shares in Invest Solar Africa (up to a maximum of P30 000 000), which are not taken up during the initial public offering when Invest Solar lists its ordinary shares on the Venture Capital Board of the BSEL.
Invest Solar Africa is currently constructing solar parks in Zimbabwe that could
generate as much as 300MW of power once complete. Furthermore, the
company is conducting a feasibility study for a project in Botswana.