Diversified mining group Anglo American made a significant impact on South Africa during the last quarter in its unfamiliar capacity as a foreign investor.
The BusinessMap Foundation now classifies Anglo as a foreign company because its primary listing is in London, from where it dominates foreign direct investment (FDI) in South Africa, as well as mergers and acquisitions activity.
BusinessMap’s quarterly FDI report, released this week, shows that Anglo’s FDI for the fourth quarter stood at R23,4-billion, up from R4,7-billion in the third quarter and double that of the first quarter’s R11,8-billion figure.
This figure, however, includes intentions to expand investments and
expressions of interest in investing. Without these the quarter’s FDI would be R11,6-billion.
Calculated on the inflated figure, the quarterly average for last year stands at R10,8-billion, making it the highest since 1996. Based on the lower figure, the quarterly average dips to R7,9-billion, but retains pole position, followed by the 1999 average of R6,3-billion per quarter.
Anglo struck the two largest South African deals of the quarter. It increased its stake in Anglo American Platinum by 8,3% to 63,8%, at a cost of R6,9-billion. And it spent R4-billion acquiring 9,6% of Kumba Resources and 34,9% of Anglovaal Mining.
The Anglo deals were found to be the seventh- and tenth-largest acquisitions in South Africa during 2002 by the Ernst & Young Mergers & Acquisitions Survey, which was also released this week. Anglo held seven out of the top 20 mergers, acquisitions, buy-outs or restructuring transactions.
The largest deal was South African Breweries’ R54-billion purchase of the Miller Brewing Company to form SAB Miller. Empowerment deals mirrored the trend, falling by half compared to the previous year. The biggest of these was a R4,1-billion management buy-out of the MTN Group — the ninth-largest deal over all.
But the accounting firm was quick to point out that the drop was amplified by large one-off deals in the previous year including the merger of BHP and Billington.
Anglo’s dominance in the FDI field resulted in its mining and minerals sector and its new base, the United Kingdom, also being named as leading contributors to foreign investment.
The leisure sector, which includes tourism, followed mining as a magnet for investment. The biggest transaction was the R10-billion luxury hotel portfolio bought by Sol and Butch Kerzner through Kerzner International.
The UK ploughed in a combined total of R11,2-billion in actual and planned FDI, followed by the United States, which had an FDI of R10-billion.
A total of eight countries share a balance of R2,3-billion in FDI, starting with Portugal accounting for R1,2-billion, while Australia recorded a contribution of R2-million.
Expansions for the quarter amounted to R10,9-billion, while new investments stood at R688-million. The only disinvestment recorded by BusinessMap was BHP Billiton’s sale of its Delmas Colliery to Kuyasa Mining for R32-million.
This, according to the foundation, is because values aren’t disclosed for most deals.