News & Insights

Most AI-linked technology shares have continued to rally, despite growing concerns that markets may be overheating. Commenting on ITWeb, Mergence CIO Peter Takaendesa noted that investor enthusiasm around artificial intelligence is being fuelled by expectations of transformational growth, particularly for chipmakers and most big US tech firms. However, he cautions that mid term cashflows for most AI model and software builders will come under pressure and investor capital will be lost in some frothy parts of the chipmakers especially the South Korea semis. Mergence finds Naspers and Prosus as relatively low risk plays on the AI value chain for investors who have time in the market.

Vodacom expects headline earnings per share for the year ended March 2026 to increase by 20% to 25%, although Mergence Investment Managers CIO Peter Takaendesa cautioned that the growth was partly “flattered by prior-year noise” linked to once-off items in the comparative period. He noted that EBITDA growth was likely in line with company guidance and market consensus expectations”, with stronger performances from operations outside South Africa helping offset weaker SA performance. Peter added that telecom operators across Africa had benefited from inflation-linked price increases, but warned investors to monitor economic pressures in oil-import-dependent markets and currency-sensitive economies going forward.

As reported in Citywire, the Mergence Domestic Balanced Fund has been recognised for leading performance in the SA Best Investment View category of the Alexforbes Annual Manager Watch™ Survey. Over the last three years the realised volatility of the fund was slightly lower than the average volatility of peers, while at the same time the fund delivered the top one-year return of 37.24% and the top three-year annualised return of 20.82%. Fazila Manjoo, Head of Multi-Asset & Global Equities at Mergence, told Citywire that the most significant driver of performance was asset allocation. This was achieved by flexibly employing multiple strategies across the portfolio that paid off. She aims to be unbiased, to not be at the extremes of risk-taking or risk-avoidance. And this shows in the numbers. The fund had the highest Sharpe ratio (risk-adjusted return) of 1.5 over the last three years.

Investor concerns about heavy AI spending are weighing on Tencent, dragging down Naspers and Prosus shares. Despite solid fundamentals, valuations have fallen amid uncertainty over AI returns. Mergence CIO Peter Takaendesa notes profit-taking due to this uncertainty, but argues Tencent remains well placed, saying it is very well positioned to leverage its 1.4 billion users to scale AI products and improve efficiency over time.

South Africa’s water crisis is forcing new thinking about how the country secures supply. As Engineering News reports, water reuse plants are emerging as a practical way to diversify supply and strengthen resilience. One example is the Siza Water recycling plant in KwaZulu-Natal, which produces about 4-million litres of potable water a day using advanced treatment technologies.  According to Chito Siame, Head: Private Equity at Mergence Investment Managers, these systems reflect best-practice global standards ensuring potable-grade output.  Reuse infrastructure can reduce reliance on dams, provide year-round supply independent of rainfall and help relieve pressure on strained municipal systems – showing how innovative water solutions can support South Africa’s long-term water security. 

Citywire picked up on an EBnet podcast in which Mergence CIO Peter Takaendesa argues that many of South Africa’s structural constraints also create investment opportunities. He highlights five pillars for unlocking growth: reliable energy supply, improved logistics and infrastructure, stronger digital connectivity, deeper capital investment, and better governance and competition. While these areas currently constrain economic activity, Peter says reforms and private-sector participation could turn them into catalysts for growth. For investors, the key is identifying companies positioned to benefit as these structural bottlenecks are gradually resolved.

South Africa’s water crisis requires more than funding- it demands strong operations and credible institutions. Mergence head of private equity, Chito Siame, argues that while a REIPPPP-style model could attract private capital, water infrastructure differs from energy because it is operationally intensive and prone to failure without proper management. Municipal reform, ring-fenced revenues, and a national agency are key to unlocking investment. Institutional investors have an opportunity, but success depends on performance-based contracts and long-term accountability. Chito notes that water is not simply a financing opportunity – it is fundamentally an operational one, highlighting that sustainable delivery depends on governance, maintenance, and skilled operators. 

Canal+ plans to shut down MultiChoice’s streaming platform Showmax as part of a strategy to streamline its streaming offering and focus on scale. Rising content costs and intense competition from global platforms such as Netflix have made it difficult for smaller services to compete profitably. Analysts say the move reflects a broader industry shift toward consolidation and fewer standalone streaming platforms. Canal+ is expected to integrate content into its own larger streaming ecosystem. Peter Takaendesa, chief investment officer at Mergence Investment Managers, said scale is crucial in streaming, noting that platforms need significant size to spread the high cost of premium content and remain competitive. 

In this article on EBnet, Mergence Investment Associate Tshepiso Appie picks up the Budget conversation on infrastructure with a useful overview of this important and growing alternative asset class that trustees need to understand so as to harness the power of private capital in building the country’s infrastructure.

Peter Takaendesa, chief investment officer at Mergence Investment Managers, said on ITweb that Cell C’s interim results align with expectations given a tough South African telecoms operating environment, especially in prepaid. He noted CEO Jorge Mendes has a clear strategy and strong operational experience, but Cell C’s reliance on a single core business makes it more vulnerable than larger, diversified peers. Peter also observed the stock has underperformed peers since listing, despite gains for early IPO buyers.