South African Airways names Takatso Consortium as new equity partner
The revival of state legacy carrier South African Airways has taken form with the announcement of the airline’s new Strategic Equity Partner (SEP). During a press hearing held on June 11, 2021 by the Ministry of Public Enterprises, Minister Pravin Gordhan named Takatso Consortium as South Airway’s new partner.
According to the Minister, South African Airways will be owned by a partnership between the South African government and Takatso Consortium. From this partnership, 51% of SAA shares will be owned privately by Takatso Consortium and 49% of the shares will be owned by the South African government. The Government will have a 'golden share' of 33% of the entity's voting rights which will be a non-dilutable share as agreed on by all parties.
The consortium is comprised of two entities namely, Harith General Partners, a pan-African fund manager and investor in African infrastructure and airport development, and Global Airways a local airline management firm.
“Our intention with SAA given its historic problems has always been to restructure SAA,” said Minister Gordhan following the carrier’s entry into business rescue on December 6, 2019 and exit from business rescue on April 30, 2021. “From that time our objective has been to ensure that a restructured SAA is one that is viable, agile, competitive and above all, it is not dependent or reliant on government finances once relaunched.”
According to Minister Gordhan the financing of SAA will now be independent of government fiscus and the carrier’s operations will be funded completely by the private partnership with Takatso Consortium, leveraging the operational expertise and commercial experience of the SEP. Takatsoo will inject a total of over 3 billion rands ($220 million) in the initial stages of the airline’s operations.
The partnership intends to list South African Airways to further raise capital and to allow investors and South African citizens to own shares to address future funding requirements once the airline has settled into its new form. The South African government will also take on responsibility for historic liabilities.
The airline’s operational capability will be a combination of ex-SAA staff and personnel from Tikasto. Board seats for the new airline will be allocated in accordance with the proportion of ownership and the majority of the airline’s Executive team positions will be held by South Africans, with either the Group CEO or the Group COO or Group CFO being a South African. SAA subsidiaries will undergo review and decision for restructuring during the due diligence procedures which will be concluded in the coming weeks.
Representing Takatso Consortium, Tshepo Mahloele Co-Founder of Harith and Gidon Novick former Comair Co-CEO and recently co-founder of Global’s airline LIFT are confident that the new relaunched SAA will emerge as an efficient and agile airline that will catalyze growth and tourism in the South African economy and build connectivity in the southern hemisphere by reestablishing partnerships with African and international airlines and networks.
“We believe that with the experience that we’ve put together as an investment house for this initiative with South African Airways and the Ministry of Public Enterprises and with Gidon and his team at Global Airways, we believe that this is a very novel venture bringing the best of South Africa together,” said Tshepo Mahloele. “We believe that the whole sector from our point of view is one that is growing especially in the African sense and we look forward to a very profitable and sustainable venture going forward in this partnership.”
“Many people have said that we are crazy collectively to be restarting an airline in today’s environment,” said Gidon Novick. “Ironically, we believe quite strongly it’s the best time. Airline and legacy models around the world are being challenged, they are flawed in many ways, but the opportunity to access aircraft at very affordable prices and most importantly the opportunity to access unbelievable talent in this industry is an incredible opportunity right now. So, timing-wise I think we’ve got it right.”
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