Black economic empowerment (BEE) deals of a disclosed value of R55-billion were announced in 2005, compared with R62-billion disclosed in 2004, according to BusinessMap Foundation. The foundation recorded 350 BEE deals last year compared with some 250 the year before.
“In 2004 there were several very large value deals, whereas in 2005 there have been many more deals but with a lower average rand-value,” it said.
It added that BEE deal-activity was certainly on the increase.
A BEE deal is one in which a largely black-owned shareholder buys a stake in a company that is still mainly white-owned. However, BusinessMap says a number of black shareholders are starting to extract the value from their stakes by selling these in the market.
“An example of this type of transaction is Cell C, where the empowerment partner reduced their stake from 40% to 25%. This is not reflected in our deal information.”
The Telkom deal was announced in 2004, but restructured in 2005 so it has not been included. In the mining sector joint ventures between white- and black-owned companies who agree to develop an asset together are also excluded.
Many contracts are being awarded to BEE companies so that organisations can expand their BEE-procurement levels.
“BEE deals remain a key figure in assessing the growth of empowerment, but BEE procurement is also becoming a significant transformation factor,” BusinessMap points out in its latest BEE Deals Book.
It adds that the R55-billion is a significant figure but that it is not the whole of the BEE activity. There were also a number of transactions where the value of the stake bought by black parties was not disclosed, it says.
“If BEE activity were considered by the frequency of general business activity rather than by deal numbers, then the Foundation’s estimate is that more than 400 major BEE-type transactions took place in 2005.
“These activities include contracts offered to BEE companies, joint-venture projects, mining-type deals where assets are sold rather than shares, as well as the share-type BEE deals.” — I-Net Bridge