Standard Bank’s BBBEE scheme, Tutuwa, has created more than R10.7-billion for participating individuals, small businesses, communities and strategic partners. Its 10-year journey is a significant milestone for Standard Bank, a journey that has seen almost 6 500 individuals and businesses benefit from the transfer of real assets.
The Tutuwa scheme passed its 10-year lock-in date for shareholders on December 31 2014. Beneficiaries of the scheme comprise more than 6100 current and past Standard Bank employees, two broad-based strategic partners, 261 small, medium and micro enterprises (SMMEs) and a community foundation.
Strategic Partners
Standard Bank Group considered it imperative to have, among its empowerment partners, leading black business groups that would provide leadership in assisting Standard Bank Group management to meet its strategic business objectives in a rapidly transforming South African banking market. Standard Bank’s key strategic BEE partners are Safika and Shanduka, which collectively own 2.2% of Standard Bank, and benefited from value creation of R4.3-billion. These strategic partners continue to invest in Standard Bank.
Shanduka, a black-owned and managed investment company benefited from value creation of over R1.7-billion. Safika, an empowerment investment house with national and international interests, benefited from value creation of over R2.5-billion.
Standard Bank employees
The beneficiaries of the Tutuwa Managers’ Trusts have received cash distributions of R900-million over the life of the scheme; their shares were worth R3.1-billion after debt as at December 31 2014. These beneficiaries have the option to remain in the scheme for another five years, take delivery of shares after settling debt or receive net cash proceeds.
Small Enterprises
In 2006, 8.9 million ordinary Standard Bank shares were conditionally transferred to 250 qualifying black SMMEs. Several additional SMMEs have been incorporated into the scheme since then, taking the total to 261 SMMEs at the date of vesting. Collectively, these firms have received cash distributions of R260-million during their participation in the scheme, providing them with a buffer against the economic volatility experienced in recent times. This component of the scheme is worth nearly R1.1-billion after debt and the SMMEs are able to benefit from the alternatives of retaining their shares or receiving cash.
Tutuwa Community Foundation
The establishment of the Tutuwa community foundation has recently been approved by the South African Reserve Bank and it will become fully operational later this year.
Tax revenue generated
Aside from creating value for its beneficiaries, the scheme has added more than R1-billion in tax revenue to the National Treasury’s coffers.
Financial details
In 2004 when the scheme was implemented, Tutuwa was worth R4.2-billion, with funding of just over R4-billion.
As at December 31 2014, the R10.7-billion of aggregate value created comprises post debt equity value of R8.2-billion across the scheme (using a share price of R143.44 at December 31 2014), and cash distributions in excess of R2.5-billion received by participants over the seven years prior to the lock-in date. Strong share price performance has continued after the lock-in date, rewarding shareholders beyond this date.