An empowerment consortium led by J&J Group has acquired 30% of JSE-listed IT company Faritec Holdings.
J&J Group is an empowerment investment and management company with interests mainly in IT and financial services. The other member of the consortium is Lesake Holdings, a union investment company 70%-owned by a union consortium.
"Our aim was to identify and approach a black economic empowerment partner that wanted to play an active role in Faritec and not just be a passive shareholder," says Faritec CEO Simon Tomlinson.
Faritec says it needed an empowerment shareholder to assist in developing the business`s strategic focus and direction, transforming the staff complement in terms of legislation and in developing appropriate procurement policies to promote the development of black-owned and small and medium-sized businesses.
Our aim was to identify and approach a black economic empowerment partner that wanted to play an active role in Faritec and not just be a passive shareholder.
Simon Tomlinson, CEO, Faritec Holdings
In addition to ethical considerations, the deal also has a strong commercial motive, says Tomlinson. "By assuming its role as a responsible corporate citizen in the South African context, Faritec will now be able to compete in all relevant public and private sector accounts."
Three of J&J`s senior executives are to be appointed to Faritec. Group executive for operations Chris Jardine will become Faritec`s non-executive chairman, J&J director Jayendra Naidoo will take up a non-executive directorship and Conscilience CEO Hasmukh Gajjar has been named an executive director.
In terms of the deal, Faritec will dispose of 30% of all its operating subsidiaries, businesses and other assets to Faritec Investments, which is to be established as a wholly owned Faritec subsidiary.
The group will then dispose of 30% of its interest in Faritec Investments to the consortium for R13.23 million to be settled by the issue to Faritec of cumulative redeemable preference shares in the company that will hold the consortium`s interest in Faritec Investments.
Between the third and fourth anniversary of the effective date of the disposal, the empowerment consortium will dispose of its 30% stake in Faritec Investments to Faritec in exchange for the redemption of the preference shares and the issue of new Faritec shares.
The value of the consortium`s interest in Faritec Investment is to be established with reference to Faritec`s market capitalisation at the time.
As part of the deal Faritec will also acquire the operational assets of Consilience, an IT systems integration joint venture between J&J, which owns 66.7%, and Tata African Holdings, which holds the balance.
Faritec will, under a management contract, oversee Consilience`s continued distribution of Tata Infotech-based solutions into the local market.
Tata is a member of the Tata group of companies, one of India`s oldest and largest conglomerates.
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