Risk-management group TransUnion on Wednesday announced that it has completed two separate black economic empowerment (BEE) transactions, with a market value of more than R80-million, in the local credit-data sector.
The first deal involved the introduction of the Cida Empowerment Fund, a broad-based empowerment entity, as a 10% shareholder in the credit bureau TransUnion ITC.
The Cida Empowerment Fund is effectively a black-owned and -controlled investment trust, established with the sole objective of building an endowment fund to finance the delivery of relevant education to the previously disadvantaged through tertiary education innovator Cida City Campus.
The second BEE deal involved the introduction of Safika Investments, the private equity investment arm of Safika Holdings, as a 25% strategic shareholder in TransUnion’s Receivables Management business.
According to TransUnion CEO Andrew Knight both deals, combining practical business sense with broad-based investment in education and training, enable TransUnion to become a more integrated organisation, with sustainable and authentic BEE development and business expansion being the key motivators.
“TransUnion was one of the first multinational companies to reinvest in South Africa in 1993. We wish to develop this process further by investing in sustainable education for financially disadvantaged South Africans to create a new generation of leaders for TransUnion ITC and South Africa at large, while also transforming our organisation along broader based principles of economic empowerment,” Knight said.
Knight stressed that the introduction of both the Cida Empowerment Fund and Safika as minority shareholders in two separate TransUnion subsidiaries is simply the first step in a planned process of effecting relevant broad-based empowerment through equity ownership and holistic transformation.
“Our empowerment strategy is designed to fuel business growth, intensify skills transfer, and encourage cultural sharing — effectively levelling the competitive playing field for the company both locally and into the rest of Africa.”
TransUnion will internally finance the sale of a 10% shareholding with TransUnion ITC to the Cida Empowerment Fund.
The dividends flowing from this investment will be used to fund the tertiary education of financially disadvantaged students through Cida City Campus.
Every Cida student is on a scholarship, effectively paying 5% of what they would pay to complete an equivalent business programme at another tertiary institution in South Africa.
Cida is educating South African youths for whom the cost of a traditional university education is too high.
Knight added that the shareholding initiative with Cida “encapsulates the spirit of the entire broad-based BEE process, and TransUnion itself will also look at sourcing future quality staff from Cida in skill-sharing and staff-retention programmes”.
“We do not believe there is a more authentic way we could contribute to the long-term creation of an equitable society in South Africa and a sustainable future for our business,” he said.
Commenting on the new deal, Taddy Blecher, CEO of the non-profit institution Cida City Campus, said: “We are excited about this deal which showcases such commitment from a significant global credit-rating company for the youth of South Africa.
“Ultimately, the way to do this is through funding education, which has relevance for economic transformation of individuals and communities, and to develop a new mass cohort of successful entrepreneurs to create long-term jobs.
“We have calculated that each Cida graduate will conservatively earn an additional R9-million over their working lifetime. This means that through this deal alone, the Cida TransUnion ITC partnership is likely to inject approximately R3,5-billion into the economy and into the hands of the more disadvantaged communities over the next 40 years”, Blecher concluded.
The 25% BEE deal within the Receivables Management business with strategic partner Safika Investments will facilitate various combined business development initiatives in a range of industry sectors, according to the group.
This will include building strong business synergies between Safika Holdings’ consumer benefits recovery business and TransUnion’s receivables management division.
Safika Holdings CEO Vuli Cuba said the deal, subject to regulatory approval, is a strong mix of both broad-based empowerment and complementary business strategy, placing both TransUnion and Safika into new markets while consolidating established ones in the receivables management sector. — I-Net Bridge