This is the first time a number has been put to the value of BEE deals which have been an important component of the transformation of the SA economy.
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Undertaken by Intellidex, a leading South African capital markets and financial services research house, the project took six months to complete and involved comprehensive analysis of every company’s deals. The value represents the net asset value after all debt and other financial obligations are deducted. Of the total, 34% (or R108bn) has been generated by BEE deals that have matured and are no longer encumbered by trading restrictions or financial obligations (meaning that beneficiaries are free to use the value as they see fit), while 66% (or R209bn) has been generated by schemes that are still ‘live’, but are expected to mature within the next few years.
The research found that R52bn (16%) of the total is attributable to staff schemes, R196bn (62%) to strategic investment partners and R69bn (22%) to broad-based community schemes. Strategic partners are companies and prominent individuals, but often have broad bases of beneficiaries. Community schemes, by contrast, are usually non-profit trusts that provide a long-term annuity stream for beneficiaries.
“The amount generated shows that recent statements that BEE deals do not create substantial value are false,” says Intellidex chairman Stuart Theobald, who led the project. “What was particularly interesting is to see the value that staff and communities have derived. The numbers indicate that many poor and working class black South Africans now have access to significant resources because of BEE deals. To get a sense of the scale of the value, consider that it is 1.8 times the total corporate income tax take in 2014 and is enough to purchase the entire stock of planted agricultural land and machinery in the country.”
The findings reveal that 2014 saw the biggest amount ever in maturing deals with almost R60bn accruing to beneficiaries. The largest was FirstRand’s deal worth R23bn, followed by Sanlam’s deal worth R14bn and Standard Bank’s R11bn. Various live deals are promising to deliver large numbers when they mature, including ones by Exxaro (R17bn) and Naspers (R14bn).