Econet Wireless has set a US$1 billion valuation for Econet InfraCo, its new infrastructure development and management business, as it prepares for a listing on the Victoria Falls Stock Exchange (VFEX) in what could be the largest IPO in Zimbabwe’s capital markets history.
Econet published details of its infrastructure, power, and real estate company for the first time, showing strong revenue and profitability. In the circular, Econet has set out the reasoning for the valuation of Econet InfraCo.
The decision by Econet to spin out its infrastructure division is in line with most mobile operators around the world and across in Africa. Econet has gone further to include its real estate division that holds its various property portfolio.
Econet’s offer to shareholders reveals the value of InfraCo. The offer is made up of Econet’s implied market capitalisation of approximately US$507 million, plus the implied valuation of Econet InfraCo of approximately US$1 billion, as determined by the independent financial advisor. This reflects the intrinsic value of the Group’s real estate, passive telecommunications infrastructure and renewable energy assets.
“Once it has been spun out, Econet InfraCo will be allowed to pursue other infrastructure related opportunities in the country including the recently announced Econet Industrial Park which is set to be developed on a 1 000-acre site near the Harare main airport,” Econet says.
The listing of Econet InfraCo on the VFEX will be done by introduction, which means the company will not be looking to raise new capital. Instead, Econet InfraCo will issue shares to existing shareholders, creating new value.
In the published circular, Econet has indicated that it will only list Econet InfraCo if the shareholders vote affirmatively to transition Econet Wireless from the main board of the ZSE to an Over-the-Counter system that enable Econet to set a minimum price for its shares in order to protect shareholder value. The controlling shareholder has been precluded from the voting by the Zimbabwe Stock Exchange.
InfraCo’s strategy
Econet has announced that the newly listed firm will focus on attracting new investments in real estate, a sector they believe has “significant growth potential.” The tower segment will benefit from a long-term anchor tenant relationship with Econet, which will provide stable, USD-denominated base revenues. Additionally, there will be opportunities for infrastructure sharing. While the power unit will initially concentrate on internal operations, Econet InfraCo aims to establish itself as a major player in the power sector due to its extensive site network, which will allow it to serve customers nationwide.
