PIC seeks independent valuation in US$359m Karan Beef acquisition deal

SOUTH AFRICA – The Public Investment Corporation is in the process of getting an independent valuation for its bid in acquiring a majority shareholding in Africa’s largest feedlot, Karan Beef.

In October last year, the PIC confirmed it was set to acquire a majority shareholding in Karan Beef in the deal us$359.52 million (R5.2bn) that seeks to reposition the firm as a major driver in transforming the agricultural sector. 

Tshifhango Ndadza, a senior market risk analyst at the PIC, affirmed that the deal had been presented to various PIC committees, reports Fin24.

 “Given the valuation gap, and how the company has performed and again because of the media perception, we are now opting for a third party valuation […] The transaction would then go through the normal process,” Ndadza said. 

Ndadza added that the bid was currently being put through confirmatory due diligence, which is a process that is undertaken when a transaction is approved but not consummated within a six month period.

Ndadza the revealed that the Unemployment Insurance Fund and the Government Employees Pension Fund were initially going to contribute an amount of less than US$138.28 million (R2bn) for the deal.

“What has changed is that the capital contribution from GEPF is going to be more than the R2bn,” he added. 

If the deal goes through, PIC would control 60% of the company, 30% would be held  by a BEE consortium while the owner, the Ivor Karan Family Trust, would retain 10% of the shares.

However, Karan Beef transaction advisor, Sello Motau, revealed that the PIC team has said it will not be able to implement the deal until the ongoing investigation in PIC have been settled.

“This is likely to derail the transaction despite very positive outcomes that the transaction could have for the economy and transformation in the agricultural sector,” Motau

The South African government is also said to be pushing to bring more ownership of businesses into the hands of black South Africans to make up for racial inequality related to the white-minority rule.

Karan Beef processes about 2,040 head of cattle daily and debones up to 300 tonnes of meat a day with South Africa being its biggest market.

The company also makes significant exports to the United Arabs Emirates, Kuwait, Qatar, Bahrain, Oman, Jordan, Egypt, Mauritius, Seychelles, Maldives, China and Hong Kong.

Established in 1974, Karan Beef operates as the largest cattle feedlot and abattoir on the continent.

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