MTN's empowerment scheme, Zakhele, is set to become a trailblazer for the rest of the ICT industry as it gets ready to become only the second such vehicle - and the first in the ICT space - to list on the JSE's BEE board.
The R9 billion fund, which was hit with trading issues after it was set up in 2010, is currently owned by about 106 000 black investors, 98% of which are individuals. However, because of a change in the Financial Services Act, the empowerment vehicle was no longer able to use its own trading platform, forcing it to find an alternative mechanism.
So far, more than 45 000 shareholders have registered to use Zakhele's trading platform services, and more than 9.4 million shares, more than R950 million, have changed hands. Zakhele owns 4% of MTN.
MTN Zakhele's decision was to go with the JSE, and to list on its BEE board, becoming only the second such fund to follow this route after Sasol's Inzalo vehicle. This moves, says Inforcomm CEO Andile Tlhoaele "gives MTN a head start in becoming the first ICT broad-based empowerment scheme to be listed on the JSE BEE board".
Smart move
Vodacom, which has an empowerment vehicle through YeboYethu, has also applied for an extension in order to continue trading while it explores a number of options, says Vodacom spokesman Richard Boorman. However, Vodacom may find listing trickier, because its R7.5 billion scheme holds shares in Vodacom SA, and not the group, which is the listed entity.
Although no date for Zakhele's listing has yet been announced, the current exemption from the Financial Services Board for Zakhele to continue trading in its current form runs out at the end of June, notes chairman Thulani Gcabashe. The JSE, which launched its BEE board in February 2011, has pronounced itself "delighted" that Zakhele is seeking a listing.
Chris Gilmour, Absa Investments analyst, notes listing the stock provides investors with a mechanism to exit their shareholding if they wish to. He notes the move is "trailblazing" for an ICT empowerment vehicle. Zakhele has yet to announce what will happen with the shares once the lock up period expires next November.
Shareholder benefit
Gilmour notes listing the empowerment vehicle is more efficient than the stock changing hands as an over-the-counter share, and a listing also provides more regulation and transparency, which will benefit shareholders. He notes while it is not cheap to list, the benefits outweigh the costs.
Shareholders will also get a real measure of the worth of the stock, says Glmour, as the market will dictate the price. Zakhele shares, currently trading on an unregulated platform, were changing hands at R111 this morning, while MTN stock - its only underlying asset - is currently trading at around R217.
JSE director of capital markets Donna Oosthuyse notes the bourse is amending its rules to facilitate empowerment fund listings, and is in talks with other companies to see if they could also use the bourse as a trading vehicle. The JSE's new rules have been reworked to make sure that only black investors can trade shares so the scheme does not fall foul of empowerment legislation.
Tlhoaele says the move has the potential to prompt more companies to follow suit as more and more black beneficiaries see the benefits of trading BEE shares. He says a listing allows shareholders to capitalise on their investment. "I hope other listed ICT companies will follow the same model as MTN and list their BEE programmes on the JSE BEE board, including employee ownership schemes."
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