LIDONGA VIRTUAL FUND
BEE DEAL STRUCTURING
Phatisa has financially engineered an innovative BEE ownership solution, driven by the guiding principles that existing shareholders are reluctant to give away value, yet recognising that BEE partners have limited financial resources. Our solution does not rely on special purpose vehicles and is compliant from day one in terms of the BEE Act, the Charters and the Codes. Through established relationships with broad-based, black women’s group, Lidonga Group Holdings Limited, Phatisa can optimise your score card points’ allocation, including new entrants, procurement facilities, as well as workers’ trusts.
The Phatisa Ownership Solution, with careful attention to the appointment of HDI directors, means a possible maximum 27 points are available on the Generic Scorecard (as defined by the DTI Codes of Good Practice). Typically, Phatisa helps the suppliers of major corporates improve their BEE score card. For procurement purposes, this would provide such corporates with over 41% of the points required to achieve the 65 points needed to become a level 4 contributor on equity alone, meaning the downstream buyer can measure 100% of the purchases from its suppliers.
Phatisa manages the entire BEE process on your behalf – from structuring a customised deal, identifying an appropriate BEE partner who can add value, negotiating expansion finance and assisting on tax and legal issues, through to developing the skills of your BEE partner.
Phatisa will remain with you throughout the journey. We do not just provide a BEE solution and then walk away, but using our private equity skills we provide an ongoing “portfolio management” service to your BEE partner. The result is that we make sure the BEE solution works for you into the future.
Doing the groundwork
To ensure that we create the right structures for each deal, we consult with a leading Johannesburg corporate tax and legal firm on specific issues such as:
- Companies Act No. 61 of 1973 – Section 38 (Financial Assistance);
- VAT and transfer duty;
- Capital Gains Tax, dividend distribution/STC liabilities and tax deductibility of interest on loans – Section 45 of the Income Tax Act;
- Shareholders agreements – board formalities, special resolutions and minority interests;
- Share sale and purchase agreements;
- Workers trust agreements;
- Implementation;
- The Broad-Based Black Economic Empowerment Act No. 53 of 2003;
- Various sector charters; and
- The DTI Codes of Good Practice on Broad Based-Black Economic Empowerment
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BEE in the rest of Africa
Whilst Phatisa’s primary BEE focus has been the South African market, we are rolling out our products to other African countries, which are undertaking “indigenisation” programmes, such as Zambia and Zimbabwe. Phatisa Advisors is 25.1% black empowered - alongside Metropolitan Life, which owns 30% equity in the company. Metropolitan Life is one of the four largest life insurance companies in South Africa. Right: deal tombstone.
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These are the people who created and now operate Lidonga – dedicated, passionate professionals who are committed to using their knowledge and experience to make a real difference in the lives of South Africa’s previously disenfranchised women.
Adding value
Lidonga has a demonstrable track record in adding value to companies in which it invests. The specific areas where Lidonga can provide its expertise include:
- Marketing;
- Networking;
- Board representation and corporate governance;
- Revenue enhancement;
- Long term strategic vision;
- Sourcing black female professionals to complement existing management; and
- Sourcing external funding.
While it has a vast reserve of skills and resources which can be called upon if required, Lidonga does not interfere where it is not needed. It believes in partnering with companies that have strong management and operational skills. Whilst it can help plug gaps in management, Lidonga does not wish to tell companies how they should run their businesses.
Facilitating Lidonga's transactions
All transactions with Lidonga are facilitated by Phatisa Advisors, ensuring a BEE solution which bears dividends for all involved.
Phatisa manages the entire BEE process for client companies – from structuring a customised deal and tailoring Lidonga’s involvement to maximise value addition, to negotiating expansion finance, assisting on tax and legal issues and developing the skills of BEE representatives on company boards. Phatisa successfully introduced and completed the SpearSystem Packaging Africa transaction for Lidonga, a hugely successful partnership which saw Phatisa being appointed as the exclusive portfolio manager for all future Lidonga transactions.
As such, Phatisa remains involved with all Lidonga’s transactions well beyond the initial structuring of the BEE solution. Using its private equity skills, Phatisa provides an ongoing portfolio management service to Lidonga, ensuring that the BEE solution works for all parties into the future.
View the Lidonga corporate brochure (PDF - 792 KB)
CONTACT DETAIL
If you require more information on the Lidonga Virtual Fund or would like to submit a business proposal please contact:
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'Our vision is to become one of the leading investment companies in South Africa, helping in the emancipation of women, thus making them economically independent.' Connie Nkosi, Lidonga Group Limited
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Corporate Responsibility Last Update: 23 February 2012 | © Phatisa 2012 All rights reserved |