Private equity firm RMB Corvest acquires 30% stake in Switch Telecom

Daba Finance/RMB Corvest acquires 30% stake in Switch Telecom

AFRICAN STOCKS AND FINANCENovember 13, 2023 at 9:35 PM UTC

Private equity firm RMB Corvest, in collaboration with BEE investment vehicle Shalamuka Capital, has acquired a minority stake in Switch Telecom, a Voice over Internet Protocol (VoIP) telecommunications service provider. Switch Telecom specializes in designing, developing, customizing, and maintaining cost-effective fixed-line voice services using VoIP technology, catering to residential, corporate, and wholesale clients primarily in South Africa.

Established in 2006, the company offers its new stakeholders a well-established business with a comprehensive service offering. In this transaction, RMB Corvest, operating through Shalamuka Capital, will acquire an effective 30% stake in Switch Telecom, significantly enhancing the Broad-Based Black Economic Empowerment (B-BBEE) scorecard of the business.

The retention of the current skilled management team is deemed significant for the business's continuity and success. Both the CEO, Gregory Massel, and the Managing Director, Shannon Swanepoel, will remain actively involved in the company as majority shareholders. This decision reflects a strategic commitment to continuity, stability, and leveraging the expertise of the existing leadership to guide the business forward.

Key Takeaways

The deal comes amid an evolving landscape in the telecoms sector due to rapid technological innovation. The transaction is seen as an opportunity to participate in the sector's growth, particularly in response to the increasing adoption of VoIP subscriptions within fixed-line voice services. As reliance on traditional copper connections diminishes, the trend toward VoIP subscriptions is expected to continue growing, positioning Switch Telecom for future success in the evolving telecom environment. Meanwhile, private equity and venture capital investments in Africa soared 66% year over year in 2022 to $7.70 billion, the highest aggregate value for the region in the last five years, S&P Global Market Intelligence data shows. Transaction volume, which includes M&A and rounds of funding, has steadily climbed in the region since 2018 and reached 404 deals in 2022. The continent saw a full-year increase in transaction volume even as activity slowed sharply in the final quarter of the year.

Private Equity

RMB Corvest

Switch Telecom

Shalamuka Capital

Telecommunications