/ 15 June 2005

The fabulous Mark Willcox

No one could have predicted that a white South African would amass a R100 -million-plus fortune from the empowerment process, but Mark Willcox, the CE of Mvelaphanda Holdings,has done exactly that.

Willcox, Mvelaphanda chairperson Tokyo Sexwale’s right-hand man since the formation of the empowerment group in 1998, holds 4,4% of the JSE Securities Exchange-listed conglomerate. Mvelaphanda Group is capitalised at R2,7-billion, giving Willcox a R118-million stake at this weeks prices.

Sexwale holds 18,5% of Mvelaphanda, valuing his holding at R480-million.

The company has shown remarkable growth since it formed with zero capital in 1998 and has strung together a succession of empowerment deals.

Sexwale, who stars in the new television series The Apprentice, which begins next week, has with a handful of other players dominated the empowerment landscape in recent years, concluding billions of rands of empowerment transactions.

Cape Town-born Willcox (35) has benefited too, netting one share for every 3,5 which has gone to Sexwale.

Sexwale (35%), Willcox (10%) and deputy executive chairperson, Mikki Xayiya (10%), jointly held 55% of Mvelaphanda before it listed on the JSE Securities Exchange last year when it merged with services group Rebserve. The three hold 27,3% of the merged company.

Mvelaphanda held 52,8% of the shares of the merged entity, enough to keep its status as a black-owned company as defined by the black economic empowerment (BEE) codes of conduct issued late last year.

Willcox’s 4,4 stake, though, would appear to be sufficient to drop its black ownership below the 50% level as he does not comply with the definition of black (African, coloured and Indian) South African as defined in BEE codes.

Mvelaphanda is aware of the threat that falling below 50% poses. The Rebserve listing document says that bringing in new historically disadvantaged South Africans (HDSA) as shareholders will mean there is a “lesser risk that the HDSA shareholding will be diluted below 50,1%”.

Department of Trade and Industry figures show that 72% of deals last year went to just six companies, one of which was Mvelaphanda.

It is usually not possible to estimate the value of empowerment deals to the individuals concerned because the companies are not public and do not disclose their financials. Deals are often linked to future targets and can be underpinned by complex financing.

Most of Mvelaphanda’s assets are now listed, though, the exception being its energy interests. There are two listed entities, Mvelaphanda Group and Mvelaphanda Resources, in which the Group has a 22,9% stake.

Where companies disclose the shareholdings of their key executives, it is not possible to calculate the net value of the holding as it may be funded by debt, but this is nonetheless the methodology widely used to assess wealth, such as by Fortune magazine.

In Willcox’s case, the R118-million position he has accumulated is possibly a sign of more to come. A corporate advisor in the BEE sector says that Willcox tells associates he has netted R300-million in empowerment deals.

Mvelaphanda sees the pace of BEE deal-making picking up. “BEE deal flow is expected to be a major driver of mergers and acquisitions in South Africa in the forseeable future. According to Ernst & Young, 2002 saw total BEE deal value of R12,4-billion and this increased by 240% in 2003 to R42,2 billion.

“New Mvelaphanda is well positioned to benefit from this anticipated increase in merger and acquisition activity,” says the Rebserve circular.

Willcox has a BA LLB from the University of Cape Town. He worked for an investment bank in the United States before returning to South Africa. He reportedly met Sexwale while structuring a deal to sell him some Kimberlite diamond mines in Kimberley in 1998.

Willcox did not respond to e-mailed questions on his role in Mvelaphanda, his unlikely status as an empowerment beneficiary and whether his personal stake affects Mvelaphanda’s standing as a black company.

In three parts

Mvelaphanda’s upstream energy interests are housed in Mvelaphanda Holdings, which is not listed. Mvelaphanda Group, which merged with JSE Securities Exchange-listed Rebserve last year, has a 22,9% stake in Mvelaphanda Resources, also JSE-listed. Mvelaphanda Group includes a range of diversified activities in property, financial and industrial services. Activities include fuel transport, technology, air transport, deliveries, actuaries and consultants, property management, property development, security systems, private equity and health care.Mvelaphanda Group also holds 20% of Batho Bonke, which has been allocated 10% of Absa.