South Africa's Barloworld to boost its black ownership

Through a R3.5 billion-worth black economic empowerment scheme.

South Africa’s industrial group Barloworld is set to boost its black shareholding through a deal involving its R3.5 billion-worth black economic empowerment scheme.

The company, which is listed on the Johannesburg stock exchange, will increase its black ownership to 48 percent from 32 percent after the sale of its R2.9 billion property portfolio to a new black-owned company Khula Sizwe Property Holdings.

It will lease back the properties for a 10-year period.

Black investors and Barloworld’s management and employees will own shares in Khula Sizwe. The black public, and approximately 14,000 of Barloworld's management and employees, will own shares in Khula Sizwe, with blue-chip Barloworld as the tenant.

The other component of the B-BBEE Transaction is the Barloworld Empowerment Foundation Trust, which has a direct three percent stake in Barloworld Limited and is focused on poverty alleviation and youth development.

Investors have from Wednesday until May 31, 2019 to apply for their portion of the 16.34 million shares available for purchase by black South Africans.

The public offer is aimed to raise R163.4 million to fund a portion of the property acquisition for 30 percent ownership.  Barloworld said it was contributing R174.2 million for 32 percent Employee Trust while the balance would be funded through an external loan.

Tantaswa Fubu, Barloworld spokesperson and executive for human capital, said the offer to give black South Africans the opportunity to participate in a property-based B-BBEE share scheme that is not related to a share price was a first of its kind in this country.

“Through Khula Sizwe, shareholders have the opportunity to invest in a property company with less volatility than a share-based scheme,” Fubu said.

“The company has guaranteed rental income from Barloworld as Khula Sizwe's tenant, making their investment more stable with predictable cashflows, and reducing risk whilst creating value for shareholders.”

Fubu said Barloworld’s B-BBEE transaction provides the company with the unique opportunity of aligning the objective and prospects of its employees and shareholders.