Here blackie, have some BEE leftovers

Selling a 10% stake? Are you kidding me? Is that all? That is all I’m afraid. Vodacom is selling shares worth R7.5 billion to a large group of people, including its staff and others who are eligible to buy. This is a BEE transaction. This airtime company has a market value of over R75 billion, meaning that over R67 billion will still remain in hands other than those deemed to be BEE. Foreigners will make up the bulk of this – Vodafone being the largest of these – and others. The folk who actually keep the company in business by buying and using its airtime as well as its overpriced cell phone contracts will only get away with a maximum of R7.5 billion worth of Vodacom. Worse still, staff, the actual engine powering the Voda train are only allowed up to R1.87 billion of shares. Yoh! You must be joking for real.

Sasol, after being spanked on the wrist by Brian Molefe, the biggest single investor in the country, for not taking BEE and AA seriously, started scratching around for credible black faces to appear on its behalf at functions etc. Some were found, they came, some left. Thereafter a BEE share offer was made to the public and branded the biggest ever in the history of BEE. This part piqued my interest. So I picked up a sample prospectus of the offer and read it for myself. Sure enough the numbers were HUGE. We are talking something worth R30 billion. Big stuff. Until you scratch a little beneath the proverbial surface.

Firstly the list of advisors to the transaction – law firms, accounting firms, bankers etc – are all not exactly BEE themselves. So these folks will reap hundreds of millions for facilitating things even before the deal is sealed. Then I see there’s also a limit to how many shares are available. Worse, the shares do not constitute a direct ownership in Sasol, rather a vehicle towards direct ownership. It’s like buying into land on which a Chicken Licken fast food outlet stands, so you earn a portion of rent received, but nothing on Chicken Licken’s earnings. Your earnings only go up if rent is increased, but it pretty much stays the same. Even worse, you aren’t allowed to exit this deal for a period of 10 years! Who exactly is benefiting from this Sasol deal? Sasol themselves admit you CAN lose your money as this is a stock market-related transaction, so even after 10 years you could still come out empty handed.

Someone is asking if I have better ideas on how BEE can be better administered so that people truly gain from its existence. I do in fact, have better ideas. But no one is willing to pay me enough for them!