In May 2008, black investors were offered an opportunity to invest in S a s ol I n z a l o , S a s ol ’ s BEE investment scheme. At the time, ordinary Sasol shares were trading at R420, while Inzalo sold at a discounted price of R366. It was a good deal until the oil price tanked. As soon as it did, Sasol shares fell to below the Inzalo listing price to as low as R362 in midJanuary.
Buying l i s t e d companies at a discounted price is one part of the appeal of BEE investments, but with expensive t rading costs, i ncreased risk due to derivative instruments and limited liquidity, wouldn’t ordinary share investment be a better bet?
“Sasol Inzalo i s a deal with a significant amount of debt on the balance sheet. Sasol, the underlying investment, is a company with t wo volatile price drivers: the oil price and the currency. This combination of a highly geared deal and a volatile underlying investment make Sasol Inzalo a high risk investment, a higher risk than an investment into Sasol alone,” explains Craig Gradidge of Gradidge-Mahura Investments.
Despite the pressure on Sasol, Inzalo paid its first dividend last year amounting to over 10% of the initial share price.