Pos­i­tive rip­ples in black em­pow­er­ment wa­ters

Financial Mail - Investors Monthly - - Editor’s Note - MARC HASEN­FUSS email Marc on hasen­fussm@times­me­dia.co.za

PER­HAPS ONE SHOULD not get car­ried away yet, but the cor­po­rate bus­tle among some of the JSE’s most en­dur­ing em­pow­er­ment com­pa­nies could prove in­spi­ra­tional.

Brim­stone In­vest­ment Corp (Pick of the Month on page 5) and African Em­pow­er­ment Eq­uity In­vest­ments (the old Sekun­jalo In­vest­ments) are caus­ing pos­i­tive rip­ples with plans to separately list their re­spec­tive fish­ing en­ter­prises, Sea Har­vest and Pre­mier Fish­ing. Sig­nif­i­cant cap­i­tal is be­ing raised, col­lec­tively top­ping the R2bn mark.

Trade union aligned Hosken Con­sol­i­dated In­vest­ments has ar­guably al­ready done this — but the sep­a­rate list­ings of Niveus, Deneb, Mon­tauk and eMe­dia were low-key af­fairs sans sig­nif­i­cant cap­i­tal rais­ing.

Both Brim­stone and AEEI com­pa­nies launched in the mid-1980s as small in­vest­ment com­pa­nies funded largely by West­ern Cape com­mu­nity-based in­vestors.

Un­like more il­lus­tri­ous em­pow­er­ment groups, Brim­stone and AEEI have en­dured. Brim­stone’s share touched a low of 28c in 2001 when the com­pany had “re­paid” share­hold­ers with a large spe­cial div­i­dend af­ter it re­struc­tured its cum­ber­some in­vest­ment port­fo­lio into a more stream­lined strate­gic col­lec­tive. Co-founders Mus­taq Brey and Fred Robert­son then had to fend off a low key hos­tile takeover.

AEEI teetered on the brink when its big­gest in­vest­ment, health and fit­ness group LeisureNet, col­lapsed. The shares hit a low of 10c in 2001, and faced sev­eral more years of cap­i­tal-starved strug­gle.

Robert­son told me re­cently that stick­ing with in­vest­ments through thick and thin is the hall­mark of em­pow­er­ment. In­deed, do­ing the hard yards has tough­ened both Brim­stone and AEEI. Spin­ning off the re­spec­tive fish­ing en­ter­prises should, pre­sum­ing there is a mar­ket ap­petite for these spe­cial­ist food coun­ters, un­lock con­sid­er­able value for share­hold­ers. Per­haps other spin-offs can be mulled in the en­su­ing years, pos­si­bly Brim­stone’s short-term in­sur­ance arm Lion of Africa or AEEI’s tech­nol­ogy op­er­a­tions un­der Ayo.

But look­ing be­yond these spe­cific coun­ters, I would hope such value un­lock­ing ex­er­cises will in­spire other em­pow­er­ment in­vest­ment coun­ters to come to mar­ket. Con­spic­u­ous by its ab­sence from the JSE is a broad based, hugely di­ver­si­fied black­owned in­vest­ment be­he­moth that can truly claim to be a ve­hi­cle to mo­bilise the sav­ings of pre­vi­ously dis­ad­van­taged South Africans.

A black-owned Rem­gro could do won­ders to har­ness the sav­ings as­pi­ra­tions of South Africans, not to men­tion rapidly ad­vance eco­nomic trans­for­ma­tion. If we can’t have a sprawl­ing BEE ve­hi­cle just yet, then please let the en­deav­ours of Brim­stone and AEEI spur many more small to medium-sized black-owned in­vest­ment com­pa­nies to the JSE this year.

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