Credit management group Real People has concluded a R95 million black economic empowerment (BEE) deal with a broad-based BEE consortium in respect of its South African operations.
The BEE consortium, backed by the IDC (Industrial Development Corporation) and Purple Capital Limited, includes the Democratic Nursing Organisation of South Africa's (DENOSA) Investment Holdings company (DIHOLD), East London businessman Mtheza Buya and youth investment vehicle Umnombo Investment Holdings.
Real People, formed in 2001, with headquarters in East London and 140 branches nationwide, wanted its BEE partners to boast broad-based shareholding, with women strongly featured in the partnership.
For the year ended 31 March 2007, Real People's audited gross revenue was R643 million and profit before taxation was R144 million. The new capital of R95.1 million will be injected into Real People by way of convertible preference share funding, which will be used to fund further growth. The BEE consortium will ultimately own 9% of Real People's South African operations, but will immediately exercise 11.25% voting control in Real People.
Real People Deputy MD Neil Grobbelaar says there are strong synergies between the various members of the consortium and the business they are buying into. "It is important to us that the deal is sustainable for the BEE partners as well as that it should add value to the group. We are confident we have achieved both objectives."
Mtheza Buya comments: "While BEE transactions in the main are a business imperative, this deal in particular resonates as it is set to boost business in our sector nationally and in the Eastern Cape. I welcome the opportunity to bring meaningful business relationships on board and to further create opportunity."
DIHOLD is the investment arm of DENOSA, representing more than 65 000 nurses and healthcare workers in South Africa, 90% of which are women.
DENOSA General Secretary Thembeka Gwagwa comments: "We are certainly excited about our investment in Real People, a valuable acquisition for us in the South African financial services sector. It's clear the opportunities for growth and empowerment within this new partnership will prove to be rewarding all-round."
The Umnombo Investment Holdings youth investment vehicle is a national-based youth founded organisation, with a strong focus on financial services, healthcare, information technology and property. All four founding members of Umnombo are children of nurses and are from the Eastern Cape.
Says Umnombo Investment Holdings' Prince Sivile Mabandla: "The youth of South Africa from different races and cultural backgrounds orchestrated the demise of apartheid, transcending their own oppression and prevailed. We, therefore, should be an intrinsic part of the economic vanguard in accomplishing organic changes within the economy. The Real People transaction epitomises such a vision and hope for youth aspirations."
Purple Capital's Executive Chairman Mark Barnes comments: "This deal is in line with our strategic mandate to structure and inject capital in BEE transactions, particularly in financial services."
The IDC's Head of Transportation, Financial Services and Other Strategic Business Unit, Kugan Thaver, says: "IDC has been associated with Real People since 2005, and is proud to have been instrumental in the transformation of Real People in terms of broadening Real People's empowerment credentials through this empowerment deal. This deal will benefit a broad-based group of over 80 000 women through DENOSA. IDC provided the large chunk of the investment of R95.1 million by providing R90.3 million to enable the consortium to close this deal."
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Real People, established in 2001, provides credit management services to the South African market. Its divisions include credit management solutions for third party clients, retail financial services, merchant funding and acquired debt. In its retail activities, Real People provides consumer credit, insurance and cellular phone products to the South African market, as well as selected markets elsewhere in sub-Saharan Africa.
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