Old Mutual in mega BEE deal

With a total value of N$307 million, this makes it 3.5 times bigger than any previous deal. This much anticipated BEE transaction will result in a broad range of black stakeholders acquiring direct ownership of the Old Mutual Group’s Namibian businesses.

The transaction incorporates three separate but inter-dependent BEE transactions for the Old Mutual Group subsidiaries in Namibia, namely Old Mutual Namibia, Nedbank Namibia and Mutual & Federal Namibia.

Black equity ownership in Old Mutual Group companies in Namibia will be increased by 12.64 percent. This includes 13.31 percent of the value of the Old Mutual Namibia business (N$220.5 million), 11.13 percent of the value of the Nedbank Namibia business (N$67.4 million) and 11.42 percent of the value of the Mutual & Federal Namibia business (N$19.8 million).

The transaction includes employees, strategic business partners, distributors, trade union members and their families, women’s organisations and church groups.

It is estimated that over 250 000 black Namibians will benefit from the transaction.

When making the announcement, Old Mutual managing director for African Operations, Johannes !Gawaxab, estimated the deal would directly benefit 785 black employees of the three companies in Namibia. In total, however, there could be as many as 250 000 direct and indirect beneficiaries, according to !Gawaxab.

“The benefits of the transaction will enhance the lives of tens of thousands of Namibians across the country both directly and indirectly,” he said, adding: “These transactions are an important step in the transformation of all three of our Namibian businesses. At the same time the transformation will contribute to the economic and social development of Namibia while also making good business sense.”

He said empowerment of women was critical for the transformation of society and business.

Women are a key component of the Old Mutual Group transaction and account for an estimated 48 percent of the beneficiaries of the Old Mutual Group transaction.”

The company says 48 percent of beneficiaries will be women, while black ownership of the Old Mutual Group businesses in Namibia will increase to 12.6 percent.

There are six different categories of empowerment participants, being staff 3.9 percent; Education Trust 2.07 percent; Distributors Trust 1.45 percent; Strategic Community Partners 0.93 percent; Strategic Business Partners 2.51 percent; and Long-term Strategic Component 1.8 percent.

In addition to staff, a total of 11 different individual companies and community groups are involved in the empowerment deal. These are Prudent Investments, Fox Investments, Northern Empowerment Investments, Latenda Investments and Ripanga Investments.

A wide range of Namibian trade unions are also set to benefit in the form of an Education Trust whereby Old Mutual Group will put shares worth N$50 million in a trust for the unions.

Through this Education Trust, Old Mutual hopes to fund the university education of 100 Namibians over the next 10 years. Ten trade unions, which represent a membership of some 600 000, will initially participate in the Education Trust. Churches such as the Evangelical Lutheran Church in Namibia (ELCIN), Evangelical Lutheran Church in The Republic Of Namibia (ELCRN), and the African Methodist Episcopal Church (AME), are also among the new shareholders.

Women’s Action for Development is another beneficiary of the BEE transaction.

The employee part of the transaction is divided into a Black Management Scheme and a Broad-Based Scheme.

New shareholders include, for instance, well-known lawyer Hosea Angula, Polytechnic rector Dr Tjama Tjivikua, estate agent Anne Gebhardt, businesswoman Linnea Shaetonhodi, ex-broadcaster and TV personality Norah Appolus, former Member of Parliament Ellen Musialela, and ex-deputy minister Michaela Hubschle.

Others include lawyers Lucia Hamutenya, Patrick Kauta, Rogers Kauta, and Tjakazenga Hoveka, Immanuel Dumeni, Hilda Basson-Namundjebo and Sandra Tjitendero.

!Gawaxab was quick to point out that the Old Mutual Group’s BEE initiative would be broad-based, unlike many other recent deals in which the same usual people keep appearing in every transaction.

CEO of one of the new BEE partners, Latenda Investment’s Norah Appolus, said at the occasion: “I can safely say that this deal is not just window-dressing because we will be actively involved in growing Old Mutual’s business,” she added.

The new partners will acquire shareholding through listed shares, meaning Old Mutual Plc shares listed on the London Stock Exchange, and Nedbank and Mutual & Federal shares listed on the Johannesburg Stock Exchange.

A unique aspect of the Old Mutual BEE initiative is that participants will be expected to make a contribution to the growth of the group’s business through performance contracts. Through the performance contracts, the new partners will be required to add value to the Old Mutual Group’s business by identifying black talent, introducing new clients and other performance measures.

Bill Turton, managing director of Nedbank in Namibia, said: “By reserving a significant portion of shares for the benefit of current and future black managers and employees, the transactions will help to transform and develop a more dynamic and effective workforce.”

Gersom Katjimune, managing director of Mutual & Federal Namibia, said the group had selected three credible business consortiums from different parts of the country as strategic business partners and allocated them shares with a market value of N$61 million.

“Our partners were chosen based on their ability to add value to the current businesses by attracting new clients and driving transformation. These partner organisations are all broad-based, have empowerment credentials, share our values and have relevant business experience. Performance agreements have been concluded to align the interests of these partners with other shareholders and to measure and reward their contribution to the business,” said Katjimune.

!Gawaxab said staff were included in the BEE initiative “as employees are key in terms of transformation of our businesses. This transaction builds on the strong foundations we have set in place in the Old Mutual Group. It truly represents a new era ‘ a new future.”

September 2006
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