Barloworld's property-based black empowerment scheme surpasses expectations
In a statement yesterday, Barloworld said more than 50000 applications were received, which will compel the group to allocate the empowerment shares equitably.
Khula Sizwe has been established to acquire and lease properties to be owned by Barloworld employees, management and the empowerment partners with an initial property portfolio of R2.86billion.
Barloworld spokesperson Tantaswa Fubu said that the offer, aimed at creating a unique property-based black empowerment share scheme and to provide steady and predictable returns over 10 years, was a “huge success” that had “surpassed all our expectations.”
Barloworld will sell some of the properties that it uses for its operations to Khula Sizwe at a discount of up to 5percent, but will continue operating from these properties to provide guaranteed rental income and predictable cash flows for at least 10 years.
In addition, Khula Sizwe could manage more properties outside of Barloworld.
“Applicants would be notified of the number of shares allocated to them and refunds for those shares applied for, but not allocated, would be processed by August 31,” Fubu said, explaining that due to the over-subscription, not all applicants would receive the number of shares that they applied for.
Fubu encouraged the new Khula Sizwe shareholders to hold their shares beyond the 5-year minimum lock-in period to benefit from owning shares in a property portfolio, backed by an A-grade listed tenant, and the steady growth which this investment would realise over time.
Shareholders from the public offer will together hold 30percent of Khula Sizwe. Management would hold 38percent (to be funded through an interest-free loan) and R8m in own equity. Barloworld would contribute R174.2m for a 32percent stake to be held by an employee trust, while the balance of the funding required would be funded through an external loan.
In the six months to end March, the heavy equipment, automotive and logistics group, Barloworld, lifted normalised headline earnings per share by more than 14percent to 521.4cents.
At the 2018 year end, financial director Donald Wilson said the strategy to fix, optimise and grow the business was expected to continue to yield improved returns for shareholders, notwithstanding the need to turn around the logistics business.
Low gearing, mainly as a result of high cash on hand, would be addressed by both acquisitions and optimisation of the existing capital structure to improve group returns, Wilson added.