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Ab InBev announces new R5.4bn empowerment scheme - and more people may benefit from it

FIN24 / 17 FEBRUARY 2020 - 16:23 / LONDIWE BUTHELEZI

A wider array of black people may finally get a chance to lay their hands on South African Breweries’ empowerment scheme shares, whose value rose almost 800 times in the past 10 years.

The local beermaker and its parent company, AB InBev, which acquired SABMiller in 2016, announced on Monday that they will launch a new broad-based black economic empowerment (B-BEE) scheme when the current SAB Zenzele matures in April.

The unwinding of the current SAB Zenzele transaction will deliver R9.7 billion to participants, the highest BEE value creation in the FMCG industry, Ab InBev said on Monday. SAB Zenzele was held privately.

The new scheme, called Zenzele Kabili, will be listed on the JSE from April "to facilitate liquidity and broaden ownership to other BEE investors", Ab InBev added.

Broader access through JSE listing

The beermaker launched SAB Zenzele in 2010, benefiting 29 000 black beer retailers, staff members and the SAB Foundation, which supports entrepreneurship projects in rural communities. In total, 40 000 black families became beneficiaries. The company said that when the scheme matures in April, shareholders who invested R100 in 2010 will receive a payout of R76 000 before tax and transaction costs, 760 times what they invested.

“The broader SA public will also have an opportunity to buy shares in the market,” said Richard Rivett-Carnac, director of Mergers and Acquisitions and Treasury at AB InBev Africa.

The current Zenzele scheme that will be winding up in April was unlisted, with its shares held in a privately owned company. Zenzele Kabili, on the other hand, will be listed on the JSE and its share price will be available for all to track. And because the initial shareholders – which will still consist of black staff members, black beer retailers and the SAB Foundation – will now have the option to sell their shares if they need money, black members of the public can snatch them at market prevailing price.

“Any black investor as defined by the codes will be able to buy shares in Zenzele Kabili. It’s available to black individuals and corporations as defined by the codes,” added Rivett-Carnac.

Virtually all other original shareholders may sell their shares right away when the new scheme launches, opening up ownership to other black individuals. The only exception will be staff members participating in the new employee scheme, whose shares will have a five-year lock in period.

Financing of the new scheme

The new BEE scheme will be implemented through a new company called SAB Zenzele Kabili that will own R5.4 billion worth of AB InBev shares. AB InBev will “gift” R1.4bn worth of its shares to the scheme – R600 million to SAB employees and another R800 million to the scheme at large. Each one of the qualifying SAB employees will get R400 000 in gross value to acquire the shares when the scheme is launched. ABInbev will also provide R2.97 billion in vendor funding at hugely discounted rates – 70% of the prime lending rate – to the scheme to facilitate the purchase of discounted shares.

Meaningful value

The current Zenzele B-BEE scheme will have the biggest payout in the history of SA’s fast-moving consumer goods empowerment transactions as it’s expected to deliver R9.7 billion when it is wind up in April, over and above the R4 billion paid out in dividends over years. In other sectors, successful B-BEE schemes implemented by listed companies include Sasol Inzalo, Vodacom’s Yebo Yethu, MTN Zakhele and Multichoice’s Phuthuma Nathi shares.

Rivett-Carnac said what SAB learnt with the current Zenzele scheme is that people wanted to see meaningful value when they get dividends and at maturity. But they also want liquidity and transparency on how companies derive the value of BEE shares, hence the decision to list on the JSE.

Jane Makhanya, owner of Getty's tavern in Tembisa, who invested R5 000 when Zenzele launched in 2010, said all beer resellers who have liquor licenses were invited by SAB to participate. She said she’s used the dividends she received over the years to extend her late mother’s house and support her university-going daughter.

“We are an extension of SAB employees. They thrive because of us, to be honest. So, for them to come to us, encourage us to invest in this was fair on their side. We didn’t trust it at the time because we’d never been part of share ownership before,” she said.

She said by reinvesting her payout, she’d treat the investment as her retirement savings.

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LINK : https://m.fin24.com/Companies/ab-inbev-announces-new-r54bn-empowerment-scheme-and-more-people-may-benefit-from-it-20200217

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