Telecommunications player Huge Group is considering as many as three acquisitions, with one of them potentially worth as much as US$100m (more than R1,2bn), as it seeks to play a leading role in the consolidation of the industry in South Africa.
The company has been trading under cautionary since 28 April about a possible telecoms acquisition. “Shareholders are advised that Huge is also engaged in discussions involving the possibility of two further acquisitions,” it said on Thursday.
Perhaps more significantly, the company said it has reached an agreement with Forefront Capital Markets, which will act as its financial adviser for the private placement of equity or equity-linked securities of the company to raise as much as $50m. This is “for the purpose of purchasing another telecoms company for approximately $100m”.
“The terms of the securities and the gross proceeds … will be negotiated substantially between Forefront Capital and the company, with one or more investors,” Huge Group said.
It said it has also reached an agreement with an unnamed, London-based financial advisory to act as its financial advisor and placement agent in connection with the private placement to raise an additional amount of as much as $50m.
“The conclusion of agreements with two leading international providers of financial advisory services places Huge in a position to raise capital,” the company said.
CEO James Herbst told TechCentral on Thursday that until now, the market has been consolidating at the top end, with deals like the proposed acquisition by Vodacom of Neotel making headlines.
“We think the market will consolidate at the mid-level to bottom, too,” he said. “There are significant opportunities out there. We have looked at a number of potential acquisitions.”
However, he said that Huge needs the ability to raise capital in order to be taken seriously when holding talks with third parties, which the agreements announced on Thursday allow it to do.
Huge Group was last trading at R3,50/share, unchanged on the session. It has added 141% in the past year, pushing its market capitalisation to R388m. — © 2015 NewsCentral Media