Black Economic Empowerment Group Shanduka has refuted suggestions that its recent purchase of a stake in MTN Nigeria was inappropriate due to personal relationships involved, saying the deal was not done directly with MTN.
The South African investment group – founded by Cyril Ramaphosa – bought a minority stake in MTN Nigeria recently in a deal worth US$355 million, the group’s biggest investment outside of South Africa to date.
But the deal has drawn widespread criticism based on the fact that Ramaphosa is also Chairman of the MTN Group – prompting speculation over the transparency and propriety of the acquisition.
Shanduka denies these claims, however, saying that acquisition negotiations took place between the group and a private equity entity only, not MTN.
The group states that on multiple occasions it took legal advice to ensure all relevant national and international regulations had been complied with throughout the transaction.
Managing Director Nandkishor Moharir has revealed that Ramaphosa properly disclosed his interest to the MTN Board at the start of negotiations and took no part in the process.
CEO Phuti Mahanyele confirmed that Ramaphosa had not been involved in an interview with Summit TV following the announcement of the acquisition.
“It was a transaction that was very straightforward, run by the head of our infrastructure business — it was a typical M&A transaction that we do,” she said. “The discussions were between us and the private equity fund so the negotiations were between the two parties so from that perspective it was your typical routine transaction that we would do.
“At no stage were there any negotiations (with MTN) itself but rather with the private equity entity that was seeking to divest from the business,” she said.
Moharir confirmed this story, saying no contact was made with MTN regarding the acquisition. He also disclosed that MTN shareholders waived their rights to purchase the stake prior to the acquisition.
Responding to suggestions that Shanduka should not be in any way involved with MTN, and that the transaction was inappropriate, Mahanyele said: “I would disagree — this is not an investment that was exclusive, it’s an opportunity that was available to any investor. From that perspective I’m not sure why we would be precluded from participating.”
Meanwhile, allegations have been made that the CEOs of Shanduka and MTN were in a romantic relationship at the time of deal.
Shanduka has denied the relationship, according to Business Day. Yet the group also claims to have sought legal advice regarding the implications of such a relationship – should it have existed – and have apparently been informed that no law or generally accepted principle of corporate governance was breached by the parties to the transaction.