Mike Metelits
ING Barings analyst Phumzile Mamjezi identifies the major black chip groups in terms of market capitalisation as the Theta Group, Metropolitan Life (Metlife), New Africa Investments Limited (Nail), Real Africa Investments Limited (Rail) and the African Merchant Bank (AMB). These groups are often interconnected with cross holdings.
Nail is owned 54,7% by Corporate Africa, and controls Metlife, AMB, African Bank and the Sowetan. The firm was founded in 1994, and listed on the Johannesburg Stock Exchange (JSE)in 1995.
Theta emerged in its present form in July 1997, when it began focusing on the low- income lending market. The next year Nail, which owned 51% of AMB, was “pursuing synergies” between AMB, Metlife and Theta. By July, Nail had acquired Hollard Insurance’s 40% stake in Theta.
Metlife is 34,9% owned by Nail subsidiary New Africa Finance Holdings, 13,2% by Sanlam/Sankorp and 24,2% by bank nominee companies and trusts. Nail acquired effective control in 1997 by exchanging 10% of Sankorp’s holdings in Metlife for non- voting Nail stock. The form of the asset swap gave Nail control of Metlife without having to raise money or give Sanlam/Sankorp decision-making power within Nail.
Railis connected with Real Africa Holdings, which controls African Life. Rail also opened shop in 1994 and listed in 1995. Real Africa Durolink (RAD), which Rail controls jointly with management, was listed in June.
The African Merchant Bank grew out of DLJ Pleaide in 1997, when Nail underwrote a share offer on the JSE, and increased its stake in the investment bank to 53%. New York investment firm Donaldson, Lufkin & Jenrette held on to a 15% stake.
Banks like AMB and RAD Investment Bank arrange equity financing and structuring for black empowerment deals. By helping empowerment firms raise cash to keep controlling interests in their own companies and buy stakes in their partners, AMB provides some of the liquidity that keeps these firms afloat.
ENDS