Dali Mpofu’s emergence as a central figure in the Deutsche Bank empowerment deal marks his transition from an advocate, of legal and social matters, to an economic player in the empowerment arena.
Mpofu, also executive director corporate affairs at listed industrial group Altron, does not distinguish between being a businessman, legal professional and an empowerment advocate.
“I cannot define myself,” he told the Mail & Guardian last week. “To me, social and economic justice are two sides of the same coin.”
He is currently driving the formulation of the empowerment charter for Information and Communications Technology (ICT) and is “advising almost everybody who is putting a charter in place”, including the legal profession, where he spent 14 years as a scholar and practitioner.
His tenure in the legal profession ended in 2000 with an appointment as an acting judge of the labour court. He describes his move to the corporate sector as a search for “a challenge, a chance to start something new”.
Altron subsidiaries that have concluded empowerment deals in recent years include Bytes Technologies and Aberdaire Cables, which concluded a flagship deal with Sipho Pityana’s Izingwe Capital.
Now Mpofu steps out on his own, as chairperson of Uthajiri Investment Holdings, prowling for opportunities in the financial services and ICT sectors. He does not rule out the possibility of investing in other sectors if opportunities arise.
Uthajiri directors include the CEO of Africa Vukani Investment Management services, Modise Motloba, and the director of BEE strategic services at Ernst & Young, Ajay Lalu, as CEO. Xoliswa Kakana, an engineer and founder as well as MD of ICT-Works, completes the leadership team.
Deutsche Bank was chosen through previous associations and “because they did not have to be convinced to do an empowerment deal”, says Mpofu.
Martin Kingston, chief country officer of Deutsche, for instance, works with Motloba on the Financial Services Charter interim advisory council. He says Deutsche recognised that “transformation is the single biggest dynamic driving not just our internal relations but those of our clients as well”.
BEE analyst and economist Duma Gqubule describes the transaction as “a smart move and a defensive one” considering the amount of business Deutsche receives for advising on empowerment transactions and from the government.
Deustche has advised on empowerment transactions for Rick Menell’s Anglo Vaal Mining’s merger with African Rainbow Minerals and Sanlam, among others. Their parastatal business includes Spoornet for their deal with Kumba and they were also lead advisers on the Telkom initial public offering.
Kingston says the transaction is not intended to pre-empt deal flow, but is rather a recognition that their clients need to procure from empowered suppliers. He estimates that the public sector — the government and parastatals — accounts for 25% to 35% of business for investment banks, roughly in line with the market share they enjoy.
Kingston says his main board in Germany was initially “uncomfortable” with selling equity, but once convinced “they wanted a viable and credible business case”. After nine months of internal introspection they devised criteria including a focus on financial services, bringing in professional skills, committing to Deutsche with a degree of exclusivity and having an understanding of the empowerment dynamic.
Uthajiri will now deploy senior executives in global markets and corporate finance and have already seconded Rakesh Garach, a former partner at Ernst & Young, to become chief operations officer.
Mpofu would like to see empowerment taken to another level. “I would like to see the broad-based nature of empowerment realised,” he says. “I am hoping we will get to an era where value add and operational involvement will become paramount.”
He notes that the empowerment codes of good practice make parameters clear and that empowerment is no longer “a set of good ideas”.
Mpofu is conscious of the power of political leverage. At the onset of the ICT charter formulation process, he implicitly stated that multinationals should not be exempt from selling equity, using public fora to put pressure on the Microsofts and Hewlett Packards of the world. The process is now at the National Economic and Development Labour Council.
Mpofu serves on a range of public bodies, including the council of the newly formed University of Johannesburg. His previous political appointments include deputy head of the department of social welfare at the African National Congress headquarters in the early 1990s. In time he may grow to be viewed, like Saki Macozoma, as one of the next generation of businessman who straddle the political and social arena to good effect.