Today's edition
Street Value
Good morning. Frogfoot and Vox have raised money at a R14.4 billion valuation to run fibre down township streets, on the theory that houses standing closer together are cheaper to reach. Shein is looking at a $27 billion public valuation, four years after private investors said $98.2 billion. Datatec is handing R7.05 billion back to its shareholders, and Nvidia is trying to talk six of the world's biggest money managers into lending against its chips.
Everybody is putting a price on something today. Let's get into it.
MARKETS
CLOSE QUARTERS
Frogfoot and Vox are quadrupling their fibre build, and aiming almost all of it at the townships
Frogfoot has spent more than twenty-five years laying fibre, and its sister company Vox has been selling internet over it. On Monday the pair, along with prepaid brand Hypa, announced new equity and bigger debt facilities in a deal that values the three businesses at R14.4 billion. Nearly all of the money is aimed at townships and lower-income areas.
What decides whether that pays is a single number: how much cable it takes to reach each home. The suburbs came to 4.5 million households and took the better part of a decade. Township streets are tighter, so there is less cable behind every front door, and that is the lever.
How the money reaches the front door:
- The DNI Consortium leads the incoming money, with JSE-listed Sabvest Capital inside it, and RMB advised, funded and arranged the debt.
- Frogfoot lays the open-access network and plans to quadruple its connection rate to 360,000 homes a year within twelve months, with more than 5,000 direct jobs.
- Hypa sells the service prepaid, as time vouchers running from a week to 30 days, because that is how the money comes back in.
Census data puts 12 to 15 million homes in those areas, with fewer than two million on fibre. The build stops where rural distances get long enough that wireless and satellite make more sense.
MARKED DOWN
Shein is listing in Hong Kong at about $27 billion, down from $98.2 billion four years ago
Shein sells $5 dresses and $10 jeans to shoppers in about 160 countries, and on Monday it started taking orders for its Hong Kong listing. It is selling 280 million shares at HK$47.60 to HK$49.50 each, raising up to about $1.77 billion. The top of that range values the company at close to $27 billion. In 2022 private investors put it at $98.2 billion, and the rounds that followed came in at $64 billion. Shein went into this year's investor meetings asking for $30 billion to $40 billion, and did not get it.
Behind the discount is a business that stopped growing quickly. Revenue rose 1.1% in the first quarter of this year, and the company has told investors the first half will be broadly in line with that. It swung to a $99 million quarterly loss after the United States removed its duty exemption on small parcels, and an accounting change added a $328 million charge on preferred shares. The European Union also put its own charge on low-value parcels from 1 July. Oof.
The buyers are largely the people who already own it: Boyu, Tiger Global and General Atlantic have subscribed for about $383 million between them. The final price is set on the 31st of August, and the shares start trading on the 1st of September.
BAGEL BITE
Which is the smallest country in the world?
A. Monaco
B. Vatican City
C. San Marino
DOING THE ROUNDS
Datatec is handing shareholders R7.05 billion, about a third of what the whole company was worth on Monday morning. The technology group behind Logicalis and Westcon declared a special dividend of R29 a share, funded by a refinancing deal that closed on 4 August. Shareholders can take the R29 in cash with 20% tax taken off, or new Datatec shares with no tax at all. Investors sent the share up almost 10% that morning. Full story →
Advtech's South African pupil numbers grew 1% this year, while its schools in the rest of Africa grew 14%. Its universities and colleges grew 19%, and that mix lifted group revenue 8% to R5.06 billion and headline earnings 16%. The board raised the interim dividend to 53 cents a share. Its staffing arm went the other way, though, with revenue down 15%. All in all, investors marked the share down 1.2% on the day. Full story →
BHP's Johannesburg listing is now worth more than R4 trillion, up about 50% so far this year. The shares hit a record high on Monday, and copper is why. For the first time the metal brought in more than half the earnings of a group that made its name in iron ore, a record $18 billion. Of the eleven analysts who have rated the stock since those results, one said buy, nine said hold and one said sell. Full story →
Nvidia has lined up six of the world's biggest financial firms behind a $500 billion financing idea. It has signed preliminary agreements with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, aiming to pull that much outside money into data centre construction over time. Chips have always been treated as something that loses value, not something a lender will lend against. Nothing is binding yet, and BlackRock's Larry Fink has compared the idea to the 1970s invention of bonds backed by home loans. This is either incredibly innovative, or incredibly slippery. Full story →
WEATHER
BAGEL GAMES
Have you got what it takes to win today’s Wordle? Play here →
THE ANSWER
As for the Bagel Bite, the answer is: B. Vatican City
Vatican City sits entirely within Rome and is the smallest independent country in the world by both land area and population. It covers just 0.44 square kilometres and has fewer than 1,000 residents. Despite its tiny size, it has its own postal service, newspaper and railway station. Monaco and San Marino are also small countries, but both are much larger.
That's your Wednesday sorted. Enjoyed it? Forward it on, a friend can subscribe in a click. Written by the Business Bagel crew.
