Naspers’s two BEE deals, announced recently, are structured with an eye to encouraging small investors to take part.
Empowerment group Welkom Yizani will buy a 15% stake in Naspers subsidiary Media24 (a total of 14,6-million shares), while Phuthuma Nathi will buy a 15% stake in pay-TV operator MultiChoice SA (about 45-million shares), also owned by Naspers.
The two transactions have similar structures and are biased towards individual investors. No single subscriber will be able to buy more than 10% of the shares on offer and the minimum purchase is R200.
This means that although no single shareholder has yet been named, the potential benefits are available to black business players and to stokvels and community trusts.
Jakes Gerwel is an independent director for Welkom Yizani, while Mandla Langa is chairing Phuthuma Nathi. But these are interim appointments and no specific shareholding has been set aside for them.
Further transactions are expected, as Naspers aims to sell 30% of MultiChoice to empowerment entities. The Phuthuma Nathi deal represents the first wave of this strategy.
Naspers has implemented three previous BEE transactions aimed at small investors rather than well-known BEE players. Its Phuthuma scheme saw about 8 000 beneÂficiaries buying 5% of M-Net in 1995. A further 10% was sold to 30 000 investors in the Phuthuma Futhi scheme in 1998. Welkom, launched in 1998, which matures this year, saw 17 000 beneficiaries buying into Naspers.
Not all of beneficiaries have been traced from these transactions. About 4 000 Welkom investors, for example, still need to be tracked down.
Naspers plans to retain its empowerment shareholders by paying dividends to Welkom Yizani and Phuthuma Nathi.
These companies, which have been formed specifically for their respective transactions, can use this cash to defray expenses and pay a 20% dividend to their shareholders.
Investors in the companies will need to have a bank account and thus will have to show proof of address to comply with Fica requirements. This means it should be easier to keep track of beneficiaries, according to Hein Brand, the managing director of Welkom Yizani.
Instead of using vendor financing, Naspers will fund 80% of the deal through preference shares in Welkom Yizani and Phuthuma Nathi.
It will buy four preference shares for every single share sold to investors, so that only 20% of the transaction will be financed by the empowerment investors. No specific time-frame has been given for the repayment of the preference shares. The shares will not convert to Naspers shares, but will remain as Welkom Yizani and Phuthuma Nathi shares, despite having the same value as shares in MultiChoice or Media24 shares, a Multichoice spokesperson said.
However, one analyst said the share in an unlisted vehicle would never be worth the same as a listed share for the same asset.
A second analyst was optimistic. “It looks pretty good,” he said. Investors will get a discount of 80%, which will give gearing advantages. He was, however, concerned about the lock-in period and the lack of liquidity. Shares must be traded over the counter, because they can only be bought by qualifying black investors.
Brand said Welkom Yizani’s prospectus was being circulated to “known BEE participants”, but that there was a “definite bias towards smaller guys who might not have the opportunity to participate in other transactions”.
Investors wanting to buy less than R2 000 worth of shares in the schemes will have to declare that they are coloured, Indian, or African and therefore eligible for shares. Above this amount, BEE verification ageninvestors will step in.