The Old Mutual empowerment deal, concluded last week, comes pretty close to satisfying the Department of Trade and Industry’s upcoming empowerment codes of good practice–tough requirements on ownership.
Stopping short of giving it full endorsement, Philisiwe Buthelezi, the department’s chief director for empowerment, praised large parts of the deal’s funding at its unveiling in Johannesburg.
Buthelezi noted that the funding, all of which is internal, is relatively straightforward vesting parties with economic interest immediately and “having no restrictions”. She also highlighted the grants, which the deal will contribute to community groups, as a positive aspect that transfers economic benefits to a broad base.
And because the partners are “risking their own capital” — as Gloria Serobe, leader of Women’s Investment Portfolio Holdings (Wiphold), one of the empowerment partners, pointed out it is fair to assume that the parties will earn points in Code 100.
Full points, however, will only be earned when the debt is fully settled in about 10 years.
Wiphold’s consortium comprises Itumeleng Kgaboesele’s Sphere Holdings and an NGO trust. The second consortium is led by Brimstone, a company headed by former Cabinet secretary Jakes Gerwel. It is complemented by Mtha we Mpumelelo, which brings new empowerment movers and shakers Sipho Pityana and former national director of public prosecutions Bulelani Ngcuka to the fold.
Ngcuka’s presence confirms Mail & Guardian reports in August last year that he was headed for a stake in South Africa’s largest financial services group. Last week, both Ngcuka and Old Mutual South Africa MD Roddy Sparks maintained that “it was not true at the time”.
Brimstone will hold stakes in Old Mutual and Nedcor, while Mtha goes it alone for a stake in Mutual and Federal.
The two consortia are joined by just about anyone who has heard of Old Mutual — brokers and distributors, clients, employees, unions and communities — in a R7,1-billion deal that the makers estimate will benefit 500 000 South Africans. The groupings will hold 5,5% of Old Mutual and 12,75% of its local business.
Six Congress of South African Trade Union (Cosatu) affiliates — not Cosatu itself — will benefit from 1 000 bursaries funded by the proceeds of a R576-million education trust over the next 10 years. Cosatu recently criticised Old Mutual, saying it was offering peanuts, but it is now believed to be supportive, although still maintaining that more can be done.
In August last year Sparks told the M&G that staff will make up a “huge component” of the deal. Staff will hold 50% in Old Mutual empowerment stake, 24% in Nedcor and 54% in Mutual and Federal.
Sparks also noted that the partners would have to add to business. As such they have signed commitments across business units and have to, for example, deliver R2,5-billion worth of employee benefits to business over the next 10 years.
Bruce Cameron, CEO of Mutual and Federal, said the partners will help identify black suppliers, panel beaters and plumbers, who will benefit from some of the R4,5-billion in claim settlements it will make this year.
Finally, Sparks said, the group will avoid high-profile names that constitute what one might call “the usual suspects”. Wiphold’s Wendy Luhabe is one of these, but will take no direct part in this deal. Brimstone has been at the game for 10 years, with a long-standing partnership with Nedcor, but cannot be accused of pitching for every deal, while Pityana and Ngcuka are only starting out in empowerment.