Even for a casual observer, it is hard to ignore changes in the Black Economic Empowerment (BEE) transaction ball game. Gone are the early days of the deal vendor bearing the burden with big discounts and long lock-ins, Transform SA has unearthed.
Now, a scheme’s aspiring shareholders have to be prepared to be exposed to the financial risks associated with the ventures, as investors in real business terrain do. To all intents and purposes, would-be investors are left to their own devices.
Perhaps, the current drought should not be surprising at all. It has been observed that there is not just enough black capital floating around to be invested in the ventures. Neither is raising capital any easier for most black investment companies.
Raising capital through institutional investors – the tried and tested approach which private equity companies use – leaves most black investment companies with a dilemma: selling a stake would reduce the percentage of black share holding, which is the big draw card for most. Majority black share holding is a major winning sales pitch when bidding for projects.
It was bound to happen! What can one say? Those ‘Ramamphosa’ days BEE deals were mainly politically driven, if you catch the drift. The lucky ones made their windfalls from ‘freebies’ – shares acquired for next to nothing; yes there were casualities like Pamodzi. ‘Rags-to-riches’ stories were made overnight. People joined the billionaires club. Lucky were they. But those days are history.
The rules of the game have really changed. Interesting to find where capital will come from. An opportunity for parastatals to provide to provide funding after some due diligence to avoid the usual write-off, which they have been one too many. My humble take!