Black empowerment investor KaboCapital has completed its R43 million buy of 30% of AltX-listed Foneworx, which has a market capitalisation of R122 million.
The deal was first announced in November and will provide FoneWorx with the capital it requires to support its expansion strategy. It will also render FoneWorx compliant with the broad-based black economic empowerment (BEE) codes of good practice.
KaboCapital is a newly-formed BEE vehicle, headed by former journalist and Johnnic CEO Connie Molusi. It also has a stake in RBA Holdings, a construction company.
Foneworx is an investment holding company with subsidiaries providing interactive telecommunication services to the advertising and media industries, business services such as electronic faxes to the business community, and aggregated applications to small, medium and micro enterprises. It also hosts switching services and provides music downloads and content to corporate clients.
FoneWorx CEO Mark Smith says Molusi and fellow KaboCapital director Mandla Madi will join the Foneworx board as non-executive directors later this month.
"I am delighted that KaboCapital is on board and look forward to working with Connie and Mandla," says Smith. "They will be actively involved in strategy and accessing new channels to market as they bring an ICT and a media flavour to our business.
"Connie will play an important role on the media side and Mandla on the ICT side," Smith adds. He says Madi will assist in popularising the company's new "FICA vault", which he says is a unique application in terms of which consumers will be able to subscribe to a Financial Intelligence Centre Act (FICA) card, which will have all the relevant and prescribed documents required to comply with FICA digitally stored in a centralised database.
Deloitte, which advised on the deal, says it represents a "new wave" in BEE where "shareholders [are] now demanding more value".
Deloitte corporate finance advisory manager Greg Benjamin says the "value proposition is more about the skills and experience the parties can bring to bear to grow the business and add value. Furthermore, the deal must make good business sense and not just be compliant."