Absa Group has finalised a R11.2 billion BEE transaction to increase black ownership to over 25% and benefit communities and staff, the lender said yesterday.
Absa said Friday the details of the new deal had been finalised and would be implemented later this year, subject to shareholder approval.
The transaction would strengthen the group’s BEE credentials in South Africa and provide communities and staff with an opportunity to benefit from the value generated by the group.
Through a transaction 7% of the group’s shareholding would be allocated to structures that would benefit ordinary black South Africans through a Corporate Social Investment (CSI) trust, and employees through a staff trust.
The 7% stake equates to about R11.2 billion based on Absa’’s recent share prices, making the deal one of the largest B-BBEE transactions in recent times.
Black ownership of Absa Group was expected to exceed the 25% threshold set out in the Financial Sector Charter.
A CSI trust, benefiting black communities, would indirectly own a 4% shareholding, while a staff trust would indirectly hold 3% of Absa Group. Black staff members in South Africa would receive just over 82% of the value of the staff trust.”
A further equivalent of about 1% of Absa Group shareholding would be made available to staff employed by subsidiaries in other markets.
“The transaction was specifically designed to align with our intent of being an active force for good, firmly demonstrating our commitment to broad-based black economic empowerment as we build a diverse and inclusive organisation not only in South Africa, but also more broadly across our business,” Arrie Rautenbach, Absa Group CEO said in a statement.
A transaction circular would be published in May and shareholders will vote on the transaction at a general meeting on June 2, 2023.
The 4% CSI trust would be focused on education and youth employability support for black South African beneficiaries. The trust would receive an annual dividend equal to 25% of the dividend per share paid by Absa Group.
The CSI trust would spend the money it receives on CSI programmes in South Africa. The beneficiaries would be reviewed annually.
All staff in the 3% group shareholding component would receive an annual dividend equal to 25% of the dividend per share paid by Absa Group.
The shares would vest after a five-year period, Absa’s share price fell marginally by 0.9% to R181.57 Friday morning, much in line with a similar decline in the bank sector index at the same time.