Johannesburg - Zandile Jakavula, the former chief executive of Spoornet who left the rail utility under a cloud in 2002, has beaten 15 other black economic empowerment (BEE) consortiums to a 26 percent stake in Timken Bearing Services South Africa (TBSSA), a subsidiary of Timken South Africa.
Jakavula heads the Bokamoso consortium, whose stake in TBSSA is worth R38.6 million. TBSSA, which was formed in 2004, will provide a range of bearing products and services to the local rail industry.
In 2003, while still part of Timken SA, the bearing services division had an annual income of R168 million. It controls 80 percent of the market.
The transaction is being financed by First National Bank as a loan over a six-year period. The loan will be repaid through cash flow generated by the business.
Timken SA is a wholly owned subsidiary of The Timken Company, a US-based firm that is the world's third-biggest manufacturer of highly engineered bearings and alloy steels.
In 2003 it had total sales of R22.8 billion, and has 26 000 associates in 27 countries.
Jakavula holds a 40 percent stake in Bokamoso. Chris Magagula, a businessman who worked for Timken SA for 10 years, holds 30 percent.
The other 30 percent is held by Rasai Investments, which focuses on the manufacturing, engineering and distribution sectors.
Its members are the SA Graduates Development Association, Nande Youth Investments, Nesica (a women-based employment group) and T&J Investments.
Bokamoso will have a seat on the board of TBSSA.
Jakavula left Spoornet in 2002 after declining to take up an alternative position as human resources manager at the rail utility. He had been found guilty of acting inappropriately in buying a house owned by the parastatal in Port Alfred.
It was alleged that he bought the house for about R83 000, well below its estimated market value of R450 000, and commissioned Spoornet staff to renovate it for R363 000.
Jakavula sits on the boards of Mendo Holding, Siyahamba Engineering, Knorr-Amabhiliki, Isitimela Rail Connectors, Eltec Holdings and Insimbi Scrap.
Danie Coetser, Timken SA's managing director, said the firm had started looking for a BEE partner last March and had conducted discussions with 15 different groupings.
"Our partnership is based on a common vision - we share the same values and work ethic."
"Bokamoso's expertise and knowledge of the rail industry adds value for our customers and the leadership qualities of its members will make a win-win partnership."
"The choice of Bokamoso also fulfilled a critical selection prerequisite in ensuring that a broad constituency of historically disadvantaged South Africans was represented."
He said BEE procurement by the company accounted for 51 percent of its R70 million procurement budget.
Jakavula said that Timken SA fitted Bokamoso's business strategy because it was a powerful player in the sector, with global recognition and the ability to generate revenues and growth. It was also committed to sustaining capital flows.
Both Coetser and Jakavula hoped TBSSA would benefit from the recent government announcement of its strategy to invest in resuscitating the ailing rail system. They also had ambitions of reaching beyond the borders of this country.
Michael Arnold, the president of the industrial cluster at the US parent company, said Timken welcomed black empowerment because it created a unique opportunity for the company to expand and it strengthened Timken's long-term confidence in South Africa.