BEE Deal of the Year
DealMakers Annual Gala Awards
At the end of each year, DealMakers calls on the corporate finance industry to submit their nominations for the BEE Deal of the Year (this was first awarded at the 2019 Gala Dinner).
With the assistance of the independent panel, and taking into account the number of nominations each deal has received, a shortlist of 3 - 5 deals is announced.
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These deals are then evaluated by the Independent Panel and they select a winner based on a variety of criteria, including but not limited to:
The transformational aspects of the deal | The execution complexity | The deal size | The potential value creation of the deal
2023 BEE Deal of the Year
Absa’s eKhaya B-BBEE transaction
In March 2023, Absa announced the implementation of an R11,2bn Broad-Based Black Economic Empowerment deal allocating a 7% shareholding to staff and community beneficiaries. The deal is structured with a 4% evergreen Corporate Social Investment component (CSI Trust) and a 3% vesting staff element (ESOP). Staff employed by Absa’s subsidiaries outside of South Africa will participate equally in a cash-equivalent staff scheme, equivalent to about 1% of the Absa Group’s market capitalisation. The transaction will directly impact c.35,000 people employed by Absa and benefit a broader constituency across South Africa through the CSI Trust.
The local advisers to the deal were:
Other shortlisted nominees for the 2023 Exxaro BEE Deal of the Year:
Heineken Beverages’ Bokamoso transaction
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Announced in July, almost 5,000 employees will jointly own a 6% stake in the company through an employee share ownership plan (ESOP) called the Bokamoso Workers Trust. The scheme is one of the conditions of ownership imposed by South Africa’s competition authorities in 2021, when Heineken International acquired Distell from minority shareholders. Distell's previous empowerment deal saw the Distell Development Trust hold a 15% interest in the group's local operations. This stake was rolled into the larger Heineken Beverages SA that was created through the merger, diluting the stake to an overall interest of 9%.
Local Advisers: Rand Merchant Bank and Webber Wentzel.
2022 BEE Deal of the Year
Shoprite Checkers’ evergreen B-BBEE transaction
The local advisers to the deal were:
Arie Marie (Ansarada), Sacha Allie (RMB), Mzila Mthenjane (Exxaro) and Warran Dukas (Shoprite)
The announced R8,9 billion transaction in May 2022 was the first of its nature in the retail sector – the deal at Shoprite’s subsidiary boosted its B-BBEE ownership to 19.2% from 13.5%. The deal recognises its employees’ role in the success of the group by providing them with additional compensation over and above their salary. The evergreen B-BBEE Employee Benefit Trust will hold 40 million shares in the local subsidiary and employees will receive dividend entitlements but will not own the shares, so the transaction will not have an impact on the shares in issue in the listed holding company. Non-SA employees will also receive equivalent payment to that of its local employees.
Comment from the Independent Panel:
This transaction is a landmark deal in the retail sector and, at R8,9bn, was the largest of the BEE transactions nominated. It
impacts 142,000 people, and the panel liked the evergreen structure and noted that it has already started to make distributions to
beneficiaries.
Other nominees for 2022 were:
Old Mutual’s ‘Bula Tsela’ BEE transaction
During the Old Mutual separation process announced in 2018, the company undertook an empowerment commitment to increase its BEE ownership to 30% by June 2023. The disposal of a further 4.36% stake in 2022 in a three-legged process involving employee and community trusts and a retail offer, satisfied this commitment. The R2,8 billion deal involved complex funding options of notional vendor financing to the trusts and actual vendor funding to the retail scheme.
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The local advisers to the deal were:
Rand Merchant Bank, Tamela, Merrill Lynch, Bowmans, PwC and Deloitte.
Seriti Resources’ acquisition of Windlab Africa
The acquisition by Seriti of a major stake in Windlab Australia’s South African and East African wind and solar-powered businesses, marked the transfer of strategically important renewable assets from foreign ownership into the hands of a black energy company. Windlab Africa has developed 230MW of projects currently operating and supplying the SA grid. The 54.2% stake in Windlab Africa for c.R892 million acquired via subsidiary Seriti Green, speaks to its goal of ensuring long term sustainability as a diversified energy producer. Seriti is currently Eskom’s largest black-controlled coal supplier.
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The local advisers to the deal were:
Standard Bank and White & Case.
Anglo American Platinum’s B-BBEE transaction
The company’s new employee share ownership plan valued at R1,8 billion, announced in September 2022, will issue to employees (SA and Zimbabwe) listed shares valued at R8,000 each year with each tranche vesting three years after allocation, and participation in the evergreen ownership of 2% of Rustenburg Platinum Mines (RPM). The RPM shares will be held into perpetuity on behalf of qualifying employees and shares will be fully funded by Amplats with employees receiving dividends as and when declared.
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The local advisers to the deal were:
Rand Merchant Bank, Merrill Lynch and Webber Wentzel.
2021 BEE Deal of the Year
Gold Medal Award
Northam Platinum's accelaration of the Zambezi BEE transaction
Marylou Greig (DealMakers), Arie Maree (Ansarada), Alet Coetzee (Northam Platinum), Mzila Mthenjane (Exxaro) and Paul Dunne (Northam Platinum)
The complex deal comprised two inter-conditional components; the acceleration of the maturity of the BEE deal concluded in 2015, four years ahead of the maturity date and an extended 15-year 26,5% empowerment transaction to include Northam employees and communities (23%) and historically disadvantaged persons (3,5%) through a new listed empowerment vehicle. The offer consideration was settled in cash as opposed to shares and at a significant premium to face value, crystalising billions in value for BEE shareholders and resulting in a reduction in issued share capital, significantly strengthening the position of remaining Northam shareholders.
The local advisers to the deal were:
Comment from the Independent Panel:
Another clear winner amongst a list of strong finalists. Inasmuch as a lot of the complexity was of the company’s own making, the panel was impressed by the way in which this unfolded, resulting in huge value sharing with participants. This transaction addressed structural overhang issues whilst involving employees and communities going forward, in a way which may yet prove to be the best practice. This deal goes way beyond compliance!
Other nominees for 2021 were:
Coca-Cola Beverages SA’s (CCBSA) BEE transaction
The deal by Coca-Cola Beverages Africa of the sale of a further 10% stake in CCBSA was one of several commitments agreed to as a result of a merger in 2016 with SABMiller. As part of the transaction c. 8,000 CCBSA employees now own c. 15% of CCBSA increasing its B-BBEE ownership to c.20%. The transaction, which was fully vendor funded and therefore not requiring employees to make an upfront investment, also undertook to create a localisation platform, deepening the level of transformation in the sugar value chain.
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The local advisers to the deal were:
Rothschild & Co, Standard Bank, Bowmans and Webber Wentzel
Anheuser-Busch InBev’s SAB Zenzele Kabili BEE transaction
The launch of the new empowerment transaction replaced the previous SAB Zenele deal which reached a total maturity value of R9,7 billion. SAB Zenzele Kabil listed on the BEE segment of the JSE in May 2021 with R5,4 billion worth of AB InBev shares. The listing not only facilitated liquidity and a broader ownership to other BEE investors, it enabled exposure not just to local operations, as was previously the case, but to the international markets in which the beer maker has a presence.
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The local advisers to the deal were:
Rand Merchant Bank, Standard Bank Questco, Bowmans, ENSafrica, BDO and PwC
Exxaro Resources disposal of Exxaro Coal Central (ECC)
The divestment of ECC, which consists of the Dorstfontein, Forzando and Tumelo operations, was undertaken using selection criteria which included value maximisation, broad based black ownership and sustainability of the new operator to manage the assets. An agreement was signed in April 2021 with Overlooked Colliery, a privately held and 100% black-owned mining entity with a strong track record operating three mines.
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The local advisers to the deal were:
Absa CIB, Proximity Advisory, Tamela, CMS, Inlexso; Tshisevhe Gwina Ratshimbilani, Werksmans and Herbert Smith Freehills South Africa
2020 BEE Deal of the Year
Gold Medal Award
Novartis' disposal to Kiara Health
Local Advisers
Dr Skhumbuzo Ngozwana, CEO and President | Kiara Health
Novartis, the Swiss multinational pharmaceutical company, took the strategic decision globally to move away from holding manufacturing in-house. Kiara Health, having secured the necessary funding, acquired the manufacturing plant and several marketed products from Novartis’ subsidiary generic drugs manufacturer Sandoz South Africa, creating a majority black-owned pharmaceutical manufacturer. The parties entered into a manufacturing and supply agreement for a minimum four year period.
Other nominees for 2020 were:
Momentum Metropolitan – establishment of the iSabelo Trust
The deal was announced to strengthen its B-BBEE ownership and benefit all permanent South African-based employees. The deal will constitute 3% of the company’s issued ordinary share capital resulting in c.44,9 million shares being acquired and held by the newly established Momentum Metropolitan iSabelo Trust. The scheme is intended to have a maximum duration of 15 years eligible for full settlement after 10 years with units allocated being subject to a maximum seven-year vesting period.
The local advisers to the deal were: Standard Bank, Webber Wentzel and EY.
Anheuser-Busch InBev’s B-BBEE transaction
In March 2020, Anheuser-Busch InBev (AB InBev), through its SAB subsidiary, concluded the partial unwind of SAB Zenzele, delivering R9,7 billion to its participants. An accelerated bookbuild offering 9,5 million AB InBev shares and priced at R7,6 billion was performed on behalf of participants electing to receive cash as part of the partial unwind. The deal initially offered participants the opportunity to reinvest a portion of their proceeds into SAB Zenzele Kabili, a new R5,4 billion BEE transaction. However, the onset of the COVID-19 pandemic resulted in this being postponed to 2021.
The local advisers to the transaction were: Rand Merchant Bank, Standard Bank, Morgan Stanley, Questco, Bowmans, ENSafrica, Webber Wentzel, BDO and PwC.
*** New Award***
2019 BEE Deal of the Year
Gold Medal Award
Nampak’s disposal of Nampak Glass
Nampak, Africa’s largest diversified packaging manufacturer, sold its glass business to Isanti Glass 1, an entity 60% owned by black investment company Kwande Capital and SABSA, the local subsidiary of beer maker AB InBev and holding company of South African Breweries, with the remaining 40%. The deal, settled in cash, was valued at R1,5 billion.
Other nominees for 2019 were:
Barloworld’s Khula Sizwe Property deal
The Barloworld Khula Sizwe BEE transaction was a two-component transaction involving the sale of properties from Barloworld to newly created entity Khula Sizwe valued at R2,9 billion as well as the free issue of Barloworld shares (3% valued at R750 million) to the Barloworld Empowerment Foundation.
The local advisers to the transaction were: Tamela, Basis Points Capital, Identity Advisory, Nedbank CIB, Dentons; Poswa, Webber Wentzel, BDO and Deloitte.
Phuthuma Nathi partial switch to MultiChoice Group
In February 2019, MultiChoice Group (MCG) was unbundled out of Naspers and listed on the JSE with a market capitalisation of R46,52 billion. In its pre-listing statement MCG, which owns 75% of MCSA, committed to a share exchange offer in terms of which shareholders of PN1 and PN2 would be afforded the opportunity to exchange a portion of their shares for shares in MCG.
The local advisers to the transaction were: Rand Merchant Bank, Tamela, Webber Wentzel and PwC.
Sale by South32 of South Africa Energy Coal to Seriti Resources-led consortium
In November 2019 Australian-listed miner South32 announced the sale of its 91.835% stake in South Africa Energy Coal to Thabong Coal, a wholly-owned subsidiary of Seriti Resources, and two trusts. Post the transaction Thabong Coal will hold an 81.835% equity stake and each of the Trusts a 5% unencumbered interest for the benefit of employees and communities.
The local advisers to the transaction were: Morgan Stanley, Macquarie Advisory and Capital Markets South Africa, Rand Merchant Bank, UBS, ENSafrica and Malan Scholes.