South Africa

Steinhoff reminds creditors they are not all equal

1 Feb 2018

The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.

Breakdown: Why Steinhoff’s complexity may save it

24 Jan 2018

An accounting scandal has exposed the retailer’s warren-like structure. Creditors who are owed close to 11 billion euros face a fight for repayment. But the prospect of a messy restructuring may help keep Steinhoff afloat for now. Breakingviews offers a guide through the maze.

Four steps to rehabilitating Barclays

23 Jan 2018

The UK bank has shed over a tenth of its market value in a year despite cutting costs and increasing capital. To close the discount, boss Jes Staley needs to rev up a misfiring investment bank, boost payouts to investors, resolve U.S. litigation and survive a UK regulatory probe.

Wall Street owes Steinhoff a billion thanks

17 Jan 2018

The South African retailer’s woes forced Citi and three peers to take hits totaling more than $1 bln. The pain is manageable. Like the collapse of UK builder Carillion, though, the episode offers a chance to review risks before a broader downturn brings more red ink - and faces.

Carrefour’s bad news will come in threes

17 Jan 2018

Europe’s biggest retailer issued a second profit warning in five months on weaker sales. New CEO Alexandre Bompard will unveil his turnaround plan next week. With a need to ramp up online investment and cut back on hypermarket stores, notably in France, greater pain is to come.

Steinhoff meltdown has silver lining for hedgies

20 Dec 2017

The S. African retailer’s bonds collapsed amid an accounting mess. But investors are not suffering equally. Steinhoff's fondness for convertibles means more of them are now being sold, pushing them to lower prices than potentially riskier paper. Nimble traders can take advantage.

Steinhoff creditors face a shrinking pot

19 Dec 2017

The South African furniture retailer lost nearly a fifth of its market value after failing to clear up accounting issues. Its debt levels are increasing and insurers are withdrawing credit guarantees. The risk is that there’s less and less for creditors to fight over if it fails.

South Africa’s turnaround will come only slowly

19 Dec 2017

The dominant ANC's choice of Cyril Ramaphosa to lead the party hints at an end to rampant corruption and economic decline. Yet reform - and even his election as president in 2019 - could be endangered by infighting. And promises of stimulus could jar with needed fiscal rigour.

Steinhoff takes minimum first step in cleanup

15 Dec 2017

The departure of Chairman Christo Wiese was a prerequisite to shoring up trust in the embattled retailer. Surviving its accounting scandal presents more imminent challenges, though. Lenders must next week be persuaded to provide more money and jittery suppliers kept on side.

South African gold giant throws Lonmin a lifeline

14 Dec 2017

Gold miner Sibanye-Stillwater is buying the troubled platinum specialist for shares worth 246 mln pounds. The offer is far from generous compared with available cost savings. But Lonmin’s financial woes and inability to raise equity make a share of a larger group attractive.

Steinhoff is priced for unvarnished truth

11 Dec 2017

An accounting scandal and debt downgrade has cast doubt over the furniture maker’s future. Retail assets and investments should comfortably cover net debt of 6.5 billion euros. With shares down 80 percent in less than a week, however, investors are anticipating more bad news.

Steinhoff meltdown shows market fallibility

6 Dec 2017

The furniture retailer shed more than half its market value after a probe was launched into accounting irregularities and its CEO stepped down. Investors who had ignored red flags such as a 2015 investigation and oddly low tax rates are paying the price of being too trusting.

McKinsey needs to run a matrix on itself

10 Nov 2017

The consulting firm has been facing tough questions over hiring in Saudi, and work in South Africa. Neither helps its image. But more worrying is how data is making consulting a commodity. Doling out advice looks less valuable when one’s own business is struggling.

Mediclinic takes advantage of sickly Spire

23 Oct 2017

The operator of hospitals in South Africa and the Gulf has bid 1.2 bln pounds in cash and shares for its UK peer. Spire Healthcare has been hit by a scandal, government cuts, and an executive vacuum. Mediclinic is offering a stingy premium and too much of its unappealing stock.

FirstRand makes punt on post-Brexit housing market

16 Oct 2017

The South African bank has offered 1.1 billion pounds for Britain’s Aldermore. Shares in the mortgage lender had slipped amid concerns about the slowing property market. At 8 times expected 2018 earnings, FirstRand could be getting a bargain – provided bad loans don’t shoot up.

Telco banks may be consigned to fringes of finance

4 Oct 2017

Orange and Altice plan to offer banking services to capitalise on a boom in digital finance. It’s a novel solution to slowing telecom revenue growth, and similar ventures were a hit in Africa. But mobile operators are entering a crowded field, with no obvious advantage.

Rocket Internet rejig exposes valuation mismatch

28 Sep 2017

The German tech investor is jettisoning half its stake in Delivery Hero for 660 mln euros. That’s welcome, but investors still don’t trust boss Oliver Samwer with the cash. Unless he pledges to return more of it to shareholders, Rocket’s stratospheric discount will persist.

Agarwal’s Anglo wager is risky way to plot breakup

21 Sep 2017

The Indian billionaire is doubling down. Paying as much as 1.5 billion pounds to raise his stake in the UK-listed miner to 20 pct may be a way of trying to force a breakup. But unpredictable commodities prices and South Africa’s volatile politics could scupper any such plans.

Bell Pottinger falls victim to PR disruption

5 Sep 2017

The UK public relations firm is in meltdown after a divisive South African campaign. The rise of online media makes it harder to justify big fees and spurs forays into far-flung markets. The result in this case is a warning to an industry that has so far shrugged off media woes.

Naspers’ addiction to Tencent is unhealthy

3 Jul 2017

The South African group is worth $28 bln less than its stake in the Chinese gaming giant. Naspers boss Bob van Dijk rules out a spinoff, but that would be the best fix. Unfortunately for would-be activists, supervoting shares make it hard for outsiders to apply pressure.