/ 14 February 2006

Cracking the Wiphold

Louisa Mojela, the chairperson and CEO of Women Investment Portfolio Holdings (Wiphold), fits me in at 4pm on a Friday after a particularly gruelling week of workshops, board meetings and ferrying her children to and from their activities. She will explain how her company maintains and measures its 250 000 empowerment beneficiaries and, in turn, its unofficial brand as the country’s flagship of broad-based black economic empowerment (BEE).

“Wiphold is the only company that has a permanent broad-base,” says Mojela. “This means that two trusts hold an unencumbered direct shareholding in the company of 32,5% and are with us in every deal we close.”

The broad-based component in BEE has been pushed to the frontline of the government’s economic policy with the release of the BEE codes of practice at the end of the last year. Their purpose is to douse the perverse effects of BEE — fronting, opportunism and accumulation — and ignite the original principles of empowerment: equality, social solidarity and the public interest.

And it is these latter principles that inform Wiphold’s BEE business ethic, says Mojela. “There are still BEE companies that take advantage of compiling lists of NGOs whenever there is a deal. These companies go with a broad-base for individual transactions,” she says.

The two Wiphold trusts are the Wiphold NGO Trust, which holds 17,5% of the company, and the Wiphold Investment Trust (15%). The NGO Trust spans at least 12 broad-based women and children focused organisations, according to the trust deeds. These include the National Baptist Church, the Young Women’s Christian Association (YWCA), People Opposing Women Abuse and various strategic trade unions including the South African Democratic Teachers Union (Sadtu) and the Democratic Nursing Organisation of South Africa.

The Investment Trust houses the original 18 000 investors in Wiphold in the five years leading up to the company’s listing in 1999 (the company delisted three years later).

The other Wiphold shares are spread between management (25%) and Old Mutual (32,5%), as a result of the company’s BEE deal with the life insurer last year. The outstanding 10% is held by a staff share scheme, which was facilitated by the company.

Wiphold’s shareholder profile is 50% black and 60% female.

Since 2000, Wiphold has paid R51-million to its beneficiaries (through the two trusts) and to 1 200 direct Wiphold beneficiaries who bought shares in the company when it made its first public offer to women in 1997.

“The only governing principle of the two trusts is that the organisations they benefit must be associated with programmes that benefit women and children,” says Mojela.

“Wiphold helps us a lot,” says Malerato Badenhorst, the CEO of Thusanang Development and Training Project based in the North West, Free State and Gauteng and one of the organisations in the Wiphold NGO Trust. “We received R50 000 last year, which has benefited about 300 women directly and 1 800 indirectly.”

Duncan Andrews, the director of Thandanani Association in Pietermaritzburg, which assists abused women, concurs. “The character that makes our relationship with Wiphold unique is that they don’t make excessive demands on us. They don’t ask for reports on how we spend the money, which places a lot of trust in us.”

Alice Ntisa, the CEO of the Tshepang Educare Trust in the Free State, says 308 women and 6 000 children benefited directly from the R75 000 the trust received from Wiphold last year.

The YWCA used R100Â 000 it received from Wiphold last year to fund two projects: home-based care and a project against domestic violence.

The South African Transport and Allied Workers Union (Satawu) is listed as a beneficiary in the NGO Trust deed. However, it is not a beneficiary. There appears to be misunderstanding as to why this is the case. Satawu insists that it declined an offer from Wiphold in 2002 to join the company as a trust beneficiary, but Mojela says the trade union broke off its allegiance with the company in protest against Wiphold’s involvement last year in the Elephant Consortium deal to acquire a stake in Telkom.

At the time of the deal, there was an outcry when it emerged that Sadtu would benefit through its stake in the company through the NGO Trust. One of the reasons the trade union movement was up in arms was because the main funder of the deal was the Public Investment Commission.

Tina Thiart, finance officer at the Women’s Hope and Education Trust in Cape Town (also listed as a beneficiary), says it has never received a payment from Wiphold, but has received incremental “personal donations from [the CEO of subsidiary Wipcapital, Gloria] Serobe “.

According to Mojela, Wiphold carries out annual audits of the organisations and NGOs they benefit “to ensure we’re not funding ghosts”.

She says the only restriction Wiphold puts on its beneficiary organisations is that they “do not find themselves competing with Wiphold” both in the company’s core business — financial services — and in other BEE deals. “We can’t be in deal A and find they’re in deal B,” she says.

Mojela and Serobe have to be credited with turning the company’s fortunes around when it began floundering in 1999, soon after the company listed with a market capitalisation of R804-million.

According to an article in the Financial Mail, there were two reasons the company began to lose steam: “Its BEE profile had been diluted by institutional shareholders and, just as the financial service sector was experiencing a shakeout, it announced its intention to launch a niche financial services operation.” (Ironically, it was this that would later give Wiphold the edge in the Old Mutual empowerment deal, which was concluded in April last year.)

Serobe rejoined Wiphold in 2001 after her five-year contract as executive director of finance at Transnet came to an end. “We went underground, avoided the press, and restructured the company,” Serobe said in an interview with Financial Mail last year. “We delisted and, with financial backing from Old Mutual, bought out all our shareholders.” (The original 18 000 investors were eventually brought back into the company through the Wiphold Investment Trust.)

Pulled back from the cusp, Wiphold proved its muscle in the financial services sector with the conclusion of two headline-grabbing BEE deals — Old Mutual and the Elephant Consortium.

In April last year, Wiphold bought small stakes in the local and London listed arms of Old Mutual and its two local subsidiaries — 0,7% of Old Mutual Plc, 1,75% of Old Mutual South Africa, 0,9% of banking group Nedcor and 3,5% of short-term insurer Mutual & Federal. It was a harbinger for women-led BEE transactions.

In May, a consortium led by Serobe, called Buffalo, secured a 3,3% stake in Telkom. Beyond bolstering the company’s bottom line, these deals serve to “galavanise the purchasing power of women and that’s an inspiration,” says Mojela.

In addition to its new stakes in Old Mutual, Wiphold’s financial services interests extend to Futuregrowth Asset Management, of which it owns 73% through Wipcapital, stockbrokerage Legae Securities (49%) and Wip Treasury Solutions (74%).

Despite their proven success, Mojela says women still have to fight much harder to be heard in the boardroom. “While some companies are very progressive, there are others that are dogged by determination not to have women. Women bring softness to business that is essential. While we understand that business is about business, business is also about dealing with human beings.”

But it’s all in a day’s work for Mojela: she describes balancing life at the office and family as a “nice challenge”.

“I love them both equally, which means I can’t compromise on either,” she says.