Kagiso Trust Investments (KTI) and the Tiso Group are to amalgamate in a landmark deal signalling a new era in broad-based black economic empowerment (BEE), which will result in an entity with a gross net asset value of R12 billion.
The two firms are the investment arms of public benefit trusts, Kagiso Trust and the Tiso Foundation, which benefit youth and education.
KTI and Tiso said yesterday they would form a merger of equals, creating a champion of scale with a complementary and diverse base of quality assets, named Kagiso Tiso Holdings. It would have a strong, mostly black, management.
The current portfolio of businesses within KTI has been structured into three pillars: financial services; resources; and information and communication technology (ICT) and industrials.
The core business areas of the financial pillar include investment banking services, life insurance, including MMI Holdings, and asset management. The industrial and ICT pillar focuses on media, including Kagiso Media, and the power and infrastructure sectors.
The Tiso Foundation is an 18 percent shareholder in the Tiso Group, which was started by black entrepreneurs in 2001. Tiso has shareholdings in Standard Bank, Investec, Rand Merchant Bank and Liberty Group.
KTI and Tiso said: “The proposed merger demonstrates the commitment… to create an enterprise-driven, professionally run, black firm focused on long-term sustainability and value creation. The merging of the entities will ensure a stronger… BEE player that will provide sustainable benefits to a wider net of beneficiaries. In particular, the proposed merger will strengthen the independence and self-sustainablity of Kagiso Trust and the Tiso Foundation.”
Kagiso Tiso Holdings would have the capacity to grow robust investment platforms in key growth areas.
“Bringing the two groups together creates a strengthened management team with capacity to manage a more diverse portfolio,” they said.
Ajay Lalu, the managing director at consulting firm Black Lite, said: “This is an exceptional opportunity to demonstrate that BEE can be taken to the next level.” He added that in future, Kagiso Tiso would not be a 25 percent shareholder in firms but would use its assets to start new operating ones.
Nkululeko Swazi, the managing director at the Kagiso group, said Kagiso Tiso would start with a strong balance sheet, with a debt level of R800 million. There would be no staff retrenchments. - Business Report