Sekunjalo Independent Media Consortium, the soon-to-be owners of Independent News & Media (INM) South Africa, will pursue growth and acquisitions of new titles and digital properties rather than cost cutting, according to Iqbal Survé.
The consortium had plans to grow vernacular titles into other provinces as well as other countries such as Mozambique and Angola, the chairman of the Sekunjalo Group said.
Iqbal Surv says print media is still growing in countries such as Brazil and India, where literacy rates are rising. Photo: Ian Landsberg. Credit: Independent Newspapers
The IOL online property, which has 2.5 million unique users and contributed about 1 percent to overall revenue, “is a great opportunity waiting to be capitalised”, Survé said.
The consortium consists of Sekunjalo Holdings, the controlling shareholder, two trade union investment arms and seven community groups from the Eastern Cape, Limpopo, Gauteng, KwaZulu-Natal and the Western Cape.
He declined to name the other members without their permission.
Survé said a “reasonably well-known” businessman was part of the consortium but there were no politicians.
Business Report understands from sources that Sandile Zungu is the businessman. Zungu would neither confirm nor deny the rumour.
INM SA publishes Business Report and more than 15 other titles including The Star in Gauteng, Cape Argus and Cape Times in the Western Cape and the Mercury and Isolezwe in KwaZulu-Natal.
Worldwide the newspaper industry is in decline, but Survé said in countries such as Brazil and India where literacy rates were increasing, print media was still growing.
“I’m really an African optimist. I believe strongly the next two decades are the decades of the African continent,” Survé said. “Ours is an expansionary strategy. I’m not thinking retrenchments and cost cutting. I am thinking growth. It’s a very good business with very good people and solid content platforms. I’ve been impressed by what the team in KwaZulu-Natal has done.”
He said more than R300 million was available for investment after the consortium agreed to buy INM SA for R2 billion, which was considerably less than the R2.4bn initially asked for by the parent company, Irish group INM.
Citibank is the key adviser of the fund, which includes funders from the Middle East and local pension funds. Some of the funding will also be sourced from Sekunjalo funds.
Survé would not disclose the structure of the funding arrangement or the terms of the sale as the consortium was bound by a non-disclosure agreement.
He said: “The equity funding is very significant so there is very little debt. At this stage all of it is equity. We may decide to do debt at a later stage for acquisitions.”
A spokesman said: “INM has agreed [to] detailed heads of terms with Sekunjalo Independent Media Consortium. As the transaction is subject to finalisation of further approvals and final agreement being signed by both parties, the detail of the heads of terms shall remain confidential pending a further announcement.”
Survé said the consortium had conducted an “extensive due diligence”, which revealed that INM SA operated under very difficult circumstances under its parent company.
Sekunjalo Investments, Surve’s listed entity, would not benefit directly from the deal, which was too large and would put the listed entity’s balance sheet at risk, he said.
Sekunjalo Investments gained 10 percent to close at 55c on the JSE yesterday.