Thursday’s announcement of a major, R123,8-million black economic empowerment (BEE) deal by international private equity group Brait, which will see BEE investors taking a 26% slice of the company’s South African subsidiary, is not the group’s first involvement in the BEE arena.
In fact, the company — which apart from Johannesburg also has listings in Luxembourg and London — has a long history of involvement in BEE transactions dating back to the mid-1990s.
Through its private equity and corporate finance activities the company has assisted in more than 30 BEE transactions and initiatives, including Pamodzi, Reclamation Group, Foodcorp, Radio Jacaranda, Radio Algoa, Rheem, Primecure, Gemini, HCI and Uthingo.
In addition, the company has been active in enterprise development and has launched independent, black-owned private-equity company Medu Capital and black-owned corporate-finance company Kago Capital.
What is probably different about the deal announced on Thursday, however, is that it was roughly a year in the making.
“We worked hard to assemble partners who matched Brait’s desire to work with like-minded and invigorated business people and financial-services professional, and one that ensured an equitable distribution of economic benefit to a broader base,” said Bheki Sibiya, CEO of Business Unity South Africa, who leads the consortium of four groupings of 60 individuals and organizations that will be taking up the stake in Brait South Africa.
Apart from Sibiya’s Norho Financial Services, which will hold an effective 7,25% of Brait, the other groups, their principals and respective shareholdings in the deal are: Africa Vanguard, principal Sandile Zungu, 7,25%; Usante Capital, principal Kagiso Chikane, 6,5%; and Representative Investments, principal Mandla Ngcobo, 5%.
The financiers have concluded a six-year funding agreement with the consortium. The principal financier to the transaction is Old Mutual Life Assurance Company — part of London-listed South African financial-services giant Old Mutual plc.
Brait has agreed to bridge finance a second financier on the same terms and conditions as those provided in the agreement.
According to Brait CEO Antony Ball, Bheki Sibiya will become chairperson of Brait South Africa and will commit 25% of his time to the company.
“This transaction was the culmination of a year-long negotiated process with all parties and provides an opportunity for our partners to share in the upside of a highly focused and motivated company that seeks to be a leader in its chosen fields of private equity, specialised funds management and corporate finance,” said Ball.
“Brait partnerships are built to be viable, sustainable and ultimately more profitable and this one is no different,” said Ball. “We are confident that we have forged an alignment of interests with a new generation of South African business people who will add significant value to the business and whose consortium will enable us to distribute the economic benefit to a broader base.”
The consortium has undertaken to assist Brait in recruiting two additional full-time black executives, who will become executive directors in time.
“We will also play an active role in securing mandates for Brait and in generating deal flow. We are already working on several transactions together,” Sibiya said.
Brait South Africa controls private equity funds in excess of R4-billion and Ball believes it is now in a position to influence positively transformation and BEE initiatives within South Africa. — I-Net Bridge