By Giwa SHILE
South Africa’s Vodacom Group said on Monday it would increase the stake held by black shareholders by up to 6.25 per cent in a 17.5 billion rand (1.34 billion dollars) black empowerment transaction.
Vodacom Group Chief Executive, Shameel Joosub said in Johannesburg that the increase in existing scheme due to unwind in October, would raise black ownership to 20 per cent.
Joosub said the increase was to enable the current black shareholders in Vodacom South Africa and the newly formed staff scheme increase their stakes in the firm.
“This amounts to 6.7 times the original capital that was invested into the deal in 2008 and therefore has been one of the most profitable and successful transactions concluded in South Africa,” Joosub said.
Under black economic empowerment rules, South African companies are encouraged to meet quotas on black ownership, employment and procurement as part of a drive to reverse decades of exclusion under apartheid.
Meeting government rules on black ownership makes a company more likely to qualify for government tenders.
Petrochemicals and energy firm Sasol had in 2017, said it would cover costs and pay bank debt related to a share sale from its Inzalo black economic empowerment scheme after the share price slumped, leaving investors unable to fully repay their debts.
Companies in South Africa are required to help increase black ownership, often using vendor financing deals to sell shares to groups excluded before 1994 under apartheid’s white minority rule.