Poised for continental growth? Inside Harith’s acquisition of FlySafair

FlySafair has grown to be a market-leading low-cost carrier since its establishment in 2014. It holds 67% of all domestic seat capacity with a fleet of 39 B737 aircraft In a significant move poised to change the aviation landscape in Africa, low-cost carrier FlySafair has been acquired by pan-African infrastructure investor Harith General Partners. This acquisition, announced on Tuesday, positions FlySafair on the threshold of expansive growth opportunities across the continent, particularly in the wake of the African Continental Free Trade Area (AfCFTA), as well as fostering deeper commercial ties with Europe.

As FlySafair navigates the crucial stages of securing further regulatory clearance from aviation authorities regarding its foreign ownership structure, which has garnered attention from the Air Services Licensing Council, the airline faces a formidable deadline of 29 March set by the licensing bodies. Despite the pressures of compliance, FlySafair maintains that the acquisition was not a direct response to regulatory findings concerning its foreign ownership, according toBusiness Report. The airline has emphasised that the deal’s ramifications will not influence the ongoing assessments by regulatory authorities, who are mandated to evaluate the proposed ownership structure independently.

Transport economist Dr Joachim Vermoteen heralded the acquisition as a promising sign for aviation development within Africa. He commented on the trend of increased cooperation among African states through bilateral agreements, asserting, “Africa is developing, and there are growing business opportunities with Europe. This is a good time to invest in one of the best airlines on the continent.” Such sentiments reflect a broader optimism about the potential for enhanced connectivity and cooperation across the region, Business Report stated.

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However, the transaction is not without its caveats. Aviation analyst Phuthego Mojapele expressed cautious optimism regarding the investment’s viability, stressing the importance of thorough due diligence for Harith’s shareholders, which notably include the Public Investment Corporation (PIC). He underscored the urgency behind FlySafair’s need to solidify this deal, implying it was motivated by the necessity to resolve previous contraventions related to its foreign ownership structure: “They had to bed the transaction with Harith.” Furthermore, Mojapele urged regulators to scrutinise Harith’s own shareholding structure to ensure compliance with competition and aviation regulations.

“What the public, who are investors in the PIC in pension investment, should worry about is whether the investment has passed all the tests that will benefit shareholders,” he warned. “In aviation, it is said that you spend like a billionaire to make millions. The PIC has to furnish investors with that confidence.” The Competition Commission has been notified of the merger; however, according to spokesperson Siyabulela Makunga, it has yet to receive the official application for the merger.

Details regarding the deal’s financial terms remain undisclosed, with both parties withholding whether it involves cash or share transactions while awaiting necessary approvals. Harith General Partners, boasting over $3 billion in assets under management and more than two decades of experience in mobilising infrastructure investments across Africa, views this acquisition as emblematic of their commitment to fostering successful African enterprises.

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