South Africa faces a multitude of challenges including climate change and socioeconomic inequality, with these issues deeply intertwined. The most vulnerable population groups tend to bear the brunt of environmental, economic, and social challenges. To address these, South Africans have implemented measures such as Corporate Social Responsibility (CSR) initiatives, Environmental, Social, and Governance (ESG) frameworks, and Black Economic Empowerment (BEE) legislation aimed at tackling inequality.
ESG has been topical over the years, and before that, CSR was widely popular worldwide including in South Africa. Locally, BEE transactions play a critical role in reducing disparities by creating opportunities for previously disadvantaged groups to participate in the economy. These transactions can be structured as transactions with industrialists, employees, retail schemes, and community trust-based transactions, all of which overlap to a certain degree.
Transactions with industrialists enable them to acquire equity in companies, often facilitated by financial mechanisms such as vendor financing or discounted share pricing. They aim to empower individuals through ownership, fostering wealth creation and financial security.
Retail schemes allow black South Africans to acquire equity or financial benefits in large companies. Designed for broad-based participation, these structured schemes require minimal upfront capital, making them accessible to a broader audience and promoting widespread economic inclusion. They also introduce the broad-based public to formal listed markets such as the JSE, I-Ex, and other exchanges where the schemes are listed, serving the important role of financial education.
Community trust-based BEE transactions benefit entire communities, particularly those that were historically disadvantaged. These involve creating trusts that hold equity on behalf of defined communities. Income generated by the trusts funds community projects such as education and infrastructure, ensuring long-term socio-economic upliftment.
How can we help?
Over the past 17 years, Tamela has established a niche in corporate finance advisory, with transactions ranging from R100 million to over R20 billion. We have advised private and public companies on impactful BEE transactions, including facilitating equity acquisitions for individuals through innovative financial structures.
We have also advised on retail schemes such as MTN Group Limited’s Zakhele and Zakhele Futhi transactions, Old Mutual Limited’s Bula Tsela transaction, and Barloworld Limited’s Khula Sizwe transaction. Transactions that we have advised on which incorporated community trusts include Exxaro Limited’s BEE replacement transaction as well as Old Mutual Limited’s Bula Tsela transaction.
We have addressed employee schemes in previous focused articles.
For more information contact Kabelo Malepe on +27 11 783 4907 or kabelo@tamela.co.za.