03 April 2003
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registered number 1969/017128/06)
Share code: SBK
Namibian Share code: SNB
Formation of a new empowerment focused financial services company
Standard Bank has entered into a memorandum of understanding ("MOU") with a consortium led by Mr Ronnie Ntuli and Safika Holdings (Proprietary) Limited ("Safika") and including Simeka Investment Holdings (Proprietary) Limited ("Simeka") and a broad based empowerment trust (the "Consortium"). In terms of the MOU, Standard Bank and the Consortium will jointly create a new empowerment focused financial services company to be named Andisa Capital (Proprietary) Limited ("Andisa Capital" or the "Company") (the "Transaction").
- The Consortium
The Consortium is a limited liability company whose membership comprises parties from the empowerment sector of South Africa. A brief summary of the credentials of the members of the Consortium has been set out below.
The Nduna Trust will have a 29% shareholding in the Consortium. The Nduna Trust is led by Mr Ronnie Ntuli who, through his involvement in a corporate finance advisory business, Nduna Advisory Services (Proprietary) Limited (in which the aforementioned trust held a 50% interest), has established himself as a respected advisor to both South African and international corporates and investors on investment strategy in Africa. Mr Ronnie Ntuli recently completed two terms as President of The Johannesburg Metropolitan Chamber of Commerce and Industry and serves as director on a number of boards.
Safika is an investment holding company, which focuses on making strategic investments and assisting with the management of such investments. It actively facilitates greater black shareholder participation in South Africa's economic evolution, ensures black economic prosperity by forming strategic alliances and acquiring significant interests in viable business ventures and promotes black business empowerment and constructive community involvement. Safika has investments in the fields of communications, infrastructure, human capital, resources and financial services. Safika will have a 29% shareholding in the Consortium.
Simeka, which will own 10% of the shares in the Consortium, is an investment holding company which provides management consulting, training, capacity building, employee benefits solutions, communications, marketing and asset management services to the Government of South Africa, public sector organisations and international agencies.
||A broad based empowerment trust
This trust will be created for the benefit of organisations representing broad based communities from historically disadvantaged backgrounds. The principal beneficiaries of the broad based trust will be disabled people, veterans of the struggle against apartheid, a womens grouping and a finance scholarship trust. This broad based trust will be the single largest shareholder in the Consortium with a 32% shareholding therein.
- Rationale for the Transaction
The rapid transformation of South Africa's social, political and economic environment requires that business positions itself at the forefront of this process in order to reflect the broader socio-economic changes, while continuing to deliver shareholder value and increasing market share. It is the view of Standard Bank that transformation is a national and business imperative. Standard Bank is actively involved in the process of transformation to ensure that its subsidiaries and associates support South Africa's socio-economic objectives and participate in the new and exciting challenges and opportunities being presented.
The Transaction establishes an empowerment partnership between the Consortium and Standard Bank that will create an independent and diversified financial services company reflecting the demographic composition of South Africa in respect of its ownership, control and management.
- Key terms of the Transaction
The Consortium will acquire 51% of the issued share capital of Andisa Capital while Standard Bank will acquire 49% thereof. The value at which the transaction will take place has not been finalised (refer to paragraph 5 below).
It is envisaged that an employee incentive scheme will be established for the incentivisation of the employees of Andisa Capital. Accordingly, and to the extent necessary, the current shareholding in Andisa Capital may be restructured. However, in line with Andisa Capital's skills development strategies, the Company will continue to be black controlled in terms of ownership and operations.
Andisa Capital will acquire from Standard Bank the agency business of SCMB Securities (Proprietary) Limited ("SCMB Securities") and the entire business of Standard Risk and Treasury Management Services (Proprietary) Limited ("SRTMS"), including its wholly-owned subsidiary that has recently commenced operations in Botswana. The value at which the transaction will take place has not been finalised (refer to paragraph 5 below).
The agency business of SCMB Securities is made up of the private client discount broking offering of Standard Bank as well as its wholesale broking business and all necessary support functions. The Transaction provides the opportunity for SCMB Securities to access additional transaction flows from new and existing clients.
SRTMS provides a full range of risk and treasury management services, assisting clients with the identification, quantification and management of a variety of complex risks. Foreign exchange, funding and commodity transactions are executed as agent on behalf of clients, as are all back office functions. Although SRTMS already has the appropriate empowerment profile with respect to its staff, the Transaction will provide SRTMS with a significant competitive advantage with respect to future business opportunities. It is envisaged that a key source of future business for SRTMS will be government departments, parastatals and clients in the mining and mineral resources sector.
In addition to the businesses to be acquired from Standard Bank it is envisaged that Andisa Capital will establish private equity and corporate finance divisions. The establishment of these divisions will enable Andisa Capital to capitalise on opportunities that are likely to arise from a combination of the Standard Bank brand and a credible, competent and empowered financial services company. Andisa Capital intends to grow organically as well as through the acquisition of businesses that operate in the arena of investment banking.
A service level and skills development agreement will be put in place to ensure that Andisa Capital has access to sufficient support from Standard Bank to develop into a fully-fledged independent investment banking group.
The services that are to be provided by Standard Bank to Andisa Capital, on an arms length basis, include inter alia, information technology, human resources, risk management and financial management support.
In terms of the skills development agreement, Standard Bank will make available to Andisa Capital skills development programmes and other processes currently used by Standard Bank such as:
- strategy development and implementation;
- access to control and approval procedures and processes; and
- executive, management and graduate development programmes.
The Consortium will have the right to appoint the majority of the board of directors of Andisa Capital, together with the Chief Executive ("CE"). The CE of Andisa Capital will be Mr Ronnie Ntuli and the non-executive Chairman will be Mr Saki Macozoma.
In addition to the services and programmes referred to in paragraph 4.4 above, Standard Bank will support the growth and development of Andisa Capital through the appointment of key representatives from Standard Bank to the board of Andisa Capital. In addition, Standard Bank will have the right to appoint the Chief Operating Officer of Andisa Capital.
The Consortium and the key shareholders of such have undertaken in favour of one another and Standard Bank that their investment in Andisa Capital will represent their exclusive participation in investment banking in South Africa. Standard Bank, in turn, has undertaken that its investment in Andisa Capital will represent Standard Bank's exclusive empowerment offering with regard to investment banking in South Africa.
The agency business of SCMB Securities will continue to provide Standard Bank's private bank and SCMB's treasury with stock broking execution services.
Standard Bank will provide funding to the Consortium for the purchase of 51% of Andisa Capital on commercial terms.
||Resultant shareholding structure
The resulting ownership structure of Andisa Capital subsequent to the implementation of the Transaction is set out below.
- The business that Andisa Capital will conduct will not initially require it to be registered as a bank in terms of the Banks Act, 1990.
- (1) The businesses acquired from Standard Bank will be rebranded to reflect the new owner.
- (2) To be established.
Standard Bank shareholders will be notified in due course as to the fulfilment of the conditions precedent and the completion and implementation of the Transaction.
- Related party
Mr Saki Macozoma, a director of Standard Bank and Safika, is not a related party in terms of the Listings Requirements of the JSE Securities Exchange South Africa. Notwithstanding this fact, the Consortium and Standard Bank have appointed an independent expert to value the businesses of SCMB Securities and SRTMS for the purposes of the Transaction. Although the valuation has not been finalised, an indicative aggregate value for the businesses of SCMB Securities and SRTMS ranges from R40 million to R60 million.
- Conditions precedent
The Transaction is conditional upon the fulfilment of, inter alia, the following conditions precedent:
- the completion of the independent valuations of SCMB Securities and SRTMS to determine the price at which the Transaction will take place;
- the conclusion of formal agreements to give effect to the Transaction;
- approval by the Competition Authorities, if required; and
- all other required statutory and regulatory approvals being obtained.
3 April 2003
Merchant Bank and sponsor
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)