JOHANNESBURG Feb 24 South Africa's state
pension fund said on Monday an investment which saw it agree to
pay far more than the market value for a 30 percent stake in
U.S.-listed Camac Energy was justified as it
was made to fund acquisitions.
"This money is going to buy assets that they didn't own
before. This is capital to fund the purchase of these assets,"
Dan Matjila, the chief investment officer of South Africa's
Public Investment Corporation (PIC), told Reuters after Camac
listed on the Johannesburg Stock Exchange.
The PIC's purchase of a Camac stake has been criticised in
the local media, including for overpaying.
Houston-based Camac, which explores for oil and gas in
Nigeria, Kenya and Gambia, has said the PIC investment would
fund the purchase of the remaining 60 percent it does not
already own in Nigeria's Oyo oil field.
The PIC, which manages 1.4 trillion rand ($127 billion) of
South African government employee retirement funds, on Friday
justified the investment, saying that while the company was "low
in capital" its "fundamentals were still sound."
On Nov 18, the PIC publicly agreed to pay $270 million for a
30 percent stake in Camac, which had a total stock value at the
time of around $150 million.
So it effectively paid over five times the market value
based on Camac's share price on that date.
But Camac chairman and chief executive Kase Lawal told
Reuters the deal was actually finalised on Sept 7, when the
company was worth around $120 million, according to Thomson
Reuters data, so the PIC in effect paid over seven times the
"Our company received the first tranche of investment from
the PIC just last Friday. But the deal was reached on Sept 7,
2013. The price was locked at that time. The project was never
announced to the public until Nov. 18," Lawal said.
Asked to explain the financial calculations behind the deal,
Lawal simply said the deal went through the proper channels and
"this transaction had actually been in the works for a very long
Since the deal was announced, the company's share price has
risen 43 percent, giving it a value of roughly $220 million as
of Friday's closing price.
The company warned investors it required additional finance
to stay in business just a week before the PIC deal was
announced, saying its debt outweighed assets by $13.4 million.
"Internal cash flow models do not forecast enough operating
cash flows to fund operations and pay outstanding liabilities
for the next 12 months," it said in its July-September earnings
filing with the U.S. Securities and Exchange Commission.
"These factors raise substantial doubt about the company's
ability to continue as a going concern."
A spokesman for the company said analyst coverage was
expected to start this week.
Both sides said Camac was the suitor which approached the
PIC and convinced it to make the investment.
"They approached us to partner with them probably 18 months
ago," PIC's Matjila told Reuters.
Lawal said his corporate finance team had approached the PIC
after it announced plans to make significant investments into
A 58-year-old Nigerian with U.S. citizenship, Lawal holds 57
percent of the company, according to its filings.