South African private equity company Medu Capital has acquired a 15 percent stake in Hero Telecoms (HeroTel) for ZAR 74.25 million. HeroTel chairman Alan Knott-Craig Jnr told ITWeb that the investment was based on an enterprise value of ZAR 495 million for 100 percent of the HeroTel business.
Medu Capital is a 100 percent black-owned private equity company focused on establishing medium-sized owner-managed businesses. The board of directors and executive management are all black South Africans and the deal means that post-acquisition, 20 percent of HeroTel's equity will be black-owned.
HeroTel was established in 2014 with a mission to consolidate the wireless internet service provider (WISP) market and connect SA to high-speed wireless Internet. HeroTel has now acquired 10 WISPs and is working on two more acquisitions. Its footprint covers KwaZulu-Natal, Western Cape, Mpumalanga, North-West Province, Limpopo and Gauteng.
Knott-Craig said the capital raised from Medu Capital will be used to further HeroTel's investment and acquisitive growth strategy. The Medu deal strengthens the balance sheet, as well as providing a willing investor for future capital raises. The combination equity and ‘gearability' removes capital constraints for growth, he added. Knott-Craig said the company currently has no firm plan for listing the group, but it is an option going forward.
