Absa rolls out ambitious plans for a R9.4 billion B-BBEE deal
Share this article:
SOUTH Africa’s fourth-biggest bank, Absa, is considering implementing a new black broad-based economic empowerment ownership (B-BBEE) composing up to 8 percent of its share capital, which equals to about R9.4 billion.
Absa said yesterday that the scheme was expected to be implemented in 2022 and was part of its broader efforts to achieve transformation in a meaningful and sustainable way.
Absa’s interim group chief executive, Jason Quinn, said the planned transaction demonstrated commitment to transformation and cements the bank’s long-standing view and approach of creating inclusive growth in Africa.
“While it is aligned with the South African government’s B-BBEE objectives and with the commitments contained in the
Financial Sector Code, we will also extend the offer to include employees across our operating markets,” said Quinn.
The lender envisaged the scheme would be broad-based, would include both third party investors and staff and that it could constitute up to 8 percent of its share capital, which equated to about R9.4bn, based on the group’s share price on Monday, and that it would be broad-based, including third party investors and staff.
Absa’s share price closed 2.25 percent higher at R143.37 on the JSE yesterday.
The staff component would enable all Absa employees across the group’s operations to become shareholders and to participate in the group’s growth. Absa said the development of the proposed empowerment scheme was hindered last year, when the Covid-19 pandemic prompted a sharp economic downturn and unfavourable market conditions.
“The intention to undertake a new B-BBEE transaction demonstrates Absa’s significant commitment to transformation. Meaningful black participation, including ownership, at all levels of the South African economy, is a national priority to ensure sustainable socio-political, financial and economic stability,” Quinn said.
The proposed scheme will be subject to shareholder and other approvals. In 2004, Absa became the first of the large banks in South Africa to conclude a significant B-BBEE transaction, issuing a 10 percent stake to Batho Bonke Capital.
The Batho Bonke empowerment consortium consequently became the second-largest shareholder in Absa. As the Batho Bonke transaction unwound, allowing beneficiaries to sell their shares, South Africans, from community trusts to women’s groups, BEE companies, stokvels and employees, benefited.
At the time Absa selected businessman and politician Tokyo Sexwale as lead promoter to maximise its objectives in selecting the broad-based BEE groupings to be introduced as its new shareholders. Sexwale appointed Nthobi Angel and Leslie Maasdorp to assist Absa in formulating criteria for the composition of appropriate groupings.
When Absa separated from Barclays plc, Absa announced that it would undertake a new B-BBEE transaction in line with its transformation efforts.
Barclays transferred a 1.5 percent stake in Absa to the Absa Empowerment Trust in 2017. Dividends subsequently received by the Absa Empowerment Trust in relation to those shares have been used to purchase additional shares, resulting in the initial stake increasing to about 1.9 percent. These shares will form part of the new B-BBEE transaction.