B-BBEE Transactions Are More Than A Box-Ticking Exercise

By Zaid Moola, Head: Wholesale Clients, South Africa for the Standard Bank Group

Since the inception of B-BBEE (BEE) in 1994 we have seen a marked shift from corporates in striving to truly transform the economy and deliver value for broader society.

A recent BEE deal that Standard Bank facilitated with JSE-listed Imperial Logistics (Imperial) illustrates this shift well. The strategic driver of the deal was that it must be linked to the Group’s broader strategy and the way in which it strengthens Imperial’s South African operations which allows for the enhancement of its business focus as a ‘Gateway to Africa’. The BEE transaction undertaken is synergistic and value additive to for all parties, Imperial, its shareholders, as well as its strategic BEE partners while delivering on not just the regulatory requirements but the intended spirit of BEE.

Imperial is an African focused provider of integrated market access and logistics solution. The Group’s purpose is to connect Africa and the world and to improve people’s lives with access to quality products and services, which is evidenced in their commitment to sustainable empowerment.

To that point, Imperial’s commitment to sustainable empowerment and transformation was the touchstone to choosing to partner with Afropulse and Willowton Group, partners who support not only the strategic objective of making Imperial more competitive locally, but contribute to their broader ‘Gateway to Africa’ strategy. Successful transactions, not just BEE transactions, have always emanated from the bedrock of strategically aligned partnerships allowing for significant value creation for all stakeholders.

Sustainable and shared value creation is achieved through:

1. Active participation and contribution that strengthens and enables growth of the company, which has a knock-on benefit of growing the economy – which is the real driver.

  1. Genuine partnerships with shared visions and objectives amongst all partners, an all too often overlooked factor.

When it comes to deals, it’s easy to become fixated on the financial aspects, but this can distract from the all-important human elements that underpin transactions. These range from the relationships built and trust painstakingly earned before anyone signs on the dotted line, to the new jobs and business opportunities created when the transaction begins to bear fruit.

Scratch the surface of any acquisition and you’ll discover an intricate web of prior connections and smaller deals that opened the doors to the smiles and handshakes making headlines.

Although the deal was filled with many intricate details, the long and short of it is that it culminated in three entities – Willowton Group, Afropulse and Converting Trade – taking a 25% stake in Imperial Logistics Group SA, which houses most of the group’s operations in the country. Each of the entities will be represented on the Board of Imperial Logistics South Africa and will be intimately involved in defining and driving the strategic growth of the business.

BEE deals are not all the same and each transaction has its own complexities and nuances. For example, while discussions on the transaction had commenced in early 2019, no one could foresee the oncoming COVID-19 pandemic and its impact on economies and life. The conclusion of the transaction is testament to the unwavering commitment and effort from each of the partners to work through these unforeseen and unparalleled circumstances and conclude a transaction that was aligned to each parties’ objectives.

Successful BEE deals are about so much more than a regulatory box-ticking exercise. It’s about intimately understanding the ambitions and pain points of the parties involved. It’s about forging strategic relationships in backing the right people and integrating the complexities of the regulatory environment with the strategic imperatives of all parties, in creating true value.

This doesn’t happen overnight. It takes years to cultivate. But it all pays off when you are able to unite people in an alliance that not only benefits the entities they represent, but the wider community, the country and the African continent, as is the case with the Imperial empowerment partnership.

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