Net1 boosts coffers of a BEE consortium

BEE Capital drought

No news is good news it seems.

The controversy surrounding the circumstances in which a tender to distribute social grants was awarded to its subsidiary, Cash Paymaster Services, has attracted unprecedented media attention than JSE-listed Net1’s role in the development of black economic empowerment.

Transform SA is reliably informed that Net1 has boosted the coffers of a special purpose vehicle that represents Business Venture Investments, a consortium of black South Africans, community groups and the Net1 Foundation. It has bought back 2.4 million of its shares from the entity.

The development might have surprised casual observers, but the BEE venture analysts had predicted it was going to happen at some point. Net1 had an agreement with that required that the consortium settle its loan obligations earlier than the initial five year time frame if the share price ever traded above R120. Time for the jackpot came when the share hit this ceiling on June 5.

Terms of the agreement stated that the loan could be settled in two ways: either through the sale of Net1 shares or the use of other financial resources. The BEE partners preferred the settling the repayment through the sale of a portion of their Net1 shares. Duly, Net1 chose to purchase the shares to reduce the dilution effect of the original BEE issue.

For those that might recall, in 2013 Net1 subsidiary Applied Technologies loaned the consortium the funds to purchase 4.4 million shares at R60.

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