Business Connexion Group in Deal to Boost BEE Status
Technology company Business Connexion Group said last week it would sell a 30% stake to black investors at a group level to enhance its empowerment status. The group said the deal would help it meet the minimum requirements of black ownership that is needed to win contracts in the public and private sectors. It was crucial to improve the ownership and other sections of its broad-based black economic empowerment scorecard, it said. A 30% empowerment shareholding would enable it "to take full advantage of these opportunities".
The shares will be sold to existing empowerment partner Gadlex, which owns 20.01% in the group's subsidiary Business Connexion, community upliftment organisations including Community Outreach Program Trust, and Ditikeni Investment Company, a non profit organisation that works in more than 200 poor black communities.
Freewheel Trade and Invest 36, a women's group whose shareholders include Felleng Sekha, an independent non executive director of the group, and YWCA Dube Charitable Trust, which is involved in projects targeting women, would also be allocated shares. Moreover, the group would also set aside shares for top executives and senior management of the group in a bid to retain them. It also said allocation of shares to management would encourage employees to "drive growth and profitability within the company".
The participating employees would qualify regardless of race or gender. However, the majority of the beneficiaries within the group's Management "A" Share Trust would be black people as defined in the Department of Trade and Industry codes, the group said.
The transaction would be funded by the group and investors locked in for five years. The deal involves the acquisition of Gadlex shares in the group for R237.5m in cash and shares. The group would issue 41,1m shares to Gadlex at R5.78 a share. Gadlex, which is partly owned by the group's CEO Benjamin Mophatlane and his brother Isaac, has been Business Connexion 's business partner since 2003.