Wiphold has a plan for Sasfin transformation

Banker Sasfin’s empowerment deal with Women Investment Portfolio Holdings (Wiphold) has shown once again that the investment company is not going to be a silent partner.

Wiphold, which Louisa Mojela, Gloria Serobe, Wendy Luhabe and Nomhle Canca founded in 1994, has agreed to buy 25.1% of the shares in Sasfin for R413.5m

But it is what Mojela and Serobe, who still remain at the company after Luhabe and Canca’s departure, are bringing to Sasfin that is interesting.

Wiphold has undertaken to become Sasfin’s shareholder of reference during a time in which smaller banks struggle with increasingly stringent capital requirements. In essence, it has promised to stump up the cash if Sasfin ever needed it.

The investment company will also put two black women on Sasfin’s boards, one to the board of Sasfin Bank and another to any other “material” Sasfin subsidiary.

Wiphold subsidiary WipCapital, which Serobe heads, will provide services to Sasfin, including bringing in new clients, developing its business, optimising its procurement processes to improve its broad-based black economic empowerment score, recruiting senior management and providing empowerment advisory services.

In short, WipCapital will help Sasfin transform, but at a monthly management fee of R516,863. The deal is still subject to a number of suspensive conditions, including proof from Wiphold that it can fund the purchase of the shares, the Sasfin board passing resolutions to bring the deal to life and obtaining an irrevocable undertaking from 65% of its shareholders to vote in favour of the deal and regulatory approval.

Serobe has said it would be premature to comment on the deal until “all the requirements have been dealt with”.

Sasfin’s latest published empowerment scorecard shows it needs Wiphold because it has not met all of the targets in the Financial Sector Code, which came into effect in November 2012.

Its empowerment equity ownership was recorded at 0.14 points compared with a target of 14 points and it scored 3.35 for black management control, compared with a target of 8. Its preferential procurement score was an entire 11.35 points off target. It scored total points of 38.72 out of 100 points, making it a level-6 contributor.

This is a far cry from that of its much larger competitor Nedbank, which is a level-2 contributor with 98.56 points. The women of Wiphold have worked their magic at Nedbank, which concluded its empowerment deal with the Wiphold consortium and others in 2005, with Serobe swiftly dispatched to the board.

Its published empowerment scorecards date back to 2008, showing that Nedbank’s overall score climbed to 98.56 points from 67.48 points in 2008, with black management control rising from 6.69 points to 8.05 points. Nedbank earned maximum points for preferential procurement, enterprise development and socioeconomic development, and close to maximum points for access to financial services, in its scorecard issued in February 2017. It improved its points for preferential procurement and financial inclusion from 2008.

Speaking after the signing of the final terms of the Sasfin transaction, Serobe said the financial services sector had always been a key focus for her firm. “[It is] critical to realising Wiphold’s vision of the economic empowerment of black women,” she said.