Allan Gray Limited, one of South Africa’s top unlisted asset-management groups, has announced a series of transactions and initiatives that will result in a 25% black empowerment (BEE) shareholding in the company, the launch of a focused effort to encourage black entrepreneurship and the acceleration of the internal transformation of the company.
Announcing the moves on Tuesday, the company said Allan Gray, the founder of Allan Gray Limited and its global partner, Orbis Investment Management Limited, will sell 15% of Allan Gray’s South African business (Allan Gray South Africa) to a broad-based BEE trust whose mission will be to foster job creation through the promotion of black entrepreneurship.
Similarly, he will sell 15% of Allan Gray’s businesses in Namibia, Botswana and Swaziland to entities in each of those countries whose mission will also be to foster entrepreneurship.
“Large-scale unemployment is an overwhelming impediment to economic advancement and the achievement of a quality standard of living among the majority of Southern Africans,” said Gray.
“Economic empowerment through the promotion of black entrepreneurship is most likely to alleviate this condition, as small businesses are the primary drivers of job creation throughout the world.”
The BEE trust will be a black-empowered vehicle controlled by trustees on behalf of a broad-based group of aspiring black entrepreneurs. Its most significant asset, and the principal source of funding for its activities through the receipt of dividends, will be its 15% interest in Allan Gray South Africa. This shareholding will be represented by the appointment of two of its trustees to the board of Allan Gray South Africa.
In addition, the firm has undertaken to reserve further shares for allocation to current and future black staff members, which, together with the shares already allocated, will bring the effective percentage of its shares held by black staff to 10% of Allan Gray South Africa.
“This will bring the firm’s effective BEE shareholding to 25%, plus one share,” said Gray.
He added that, as a private company, Allan Gray has been committed to the principle of “empowerment from within” through providing senior staff (both black and white) the opportunity to purchase shares in the company.
“Now, by reserving 10% of its shares for allocation to black staff members, the company is continuing with an established practice whose success in attracting, developing and retaining talented individuals has been proven by its history of wealth creation for its clients.”
The company is also firmly committed to transforming its staff complement through employment-equity initiatives, supported by the allocation of shares to senior black staff, said Gray. It aims to improve on its current 48% level of black staff by recruitment, development and promotion to the most senior levels of the business.
Education benefit
Allan Gray also announced on Tuesday that the full proceeds of the sale to the BEE trust will be donated to a public benefit organisation to be known as the Allan Gray Foundation, whose mission will be to fund the education and training of prospective entrepreneurs and thereby promote economic growth and job creation.
Further, he announced that the firm has committed to donate, on an annual basis, a minimum of 7% of its after-tax profits to deserving social causes in perpetuity. The bulk of the annual donation will be committed to the Allan Gray Foundation.
“By concentrating and focusing the firm’s efforts with those of the foundation, we can ensure that as much benefit as possible will accrue to identified beneficiaries,” he explained.
It is anticipated that the funds available to the foundation will enable it to fund an annual intake of approximately 100 students and that, in due course, the total number of students supported at universities will exceed 400 at any point in time.
Successful candidates (to be called Allan Gray fellows) will be granted full financial support to attend a South African university to pursue a degree in business or other relevant field.
Scholarships will be funded by the Allan Gray Foundation and awarded on a competitive basis to attract the highest-calibre students. Allan Gray fellows who excel will be given the opportunity to pursue a postgraduate degree at a South African university or top-rated international institution, frequently after acquiring relevant working experience.
As part of its mission of promoting entrepreneurship, the BEE trust will finance black graduates of the Allan Gray fellow programme in their pursuit of launching and owning businesses.
In conclusion, Gray said that together, the combined efforts of the BEE trust, the Allan Gray Foundation and the annual contribution from Allan Gray Limited will serve to help overcome the most significant impediments facing aspiring entrepreneurs — education and skills development and access to capital. — I-Net Bridge