Activist investor role demands board seat

KAGISO Tiso Holdings may no longer see itself as a black economic empowerment company as it looks to pursue investment opportunities “outside the BEE arena”, but CEO Vuyisa Nkonyeni acknowledges that BEE will still give it a massive advantage over its competitors.

“Our BEE credentials will continue to allow us to tap into a broader set of opportunities. BEE gives us a competitive advantage vis-á-vis a lot of our competitors, investment houses and private equity funds. So BEE remains an important element of our growth story.”

So, while it desperately wants to be seen as a player like any other player out there, is it still dependent on its status as a BEE company?

“I wouldn’t say ‘dependent’. I would say it definitely enhances our proposition. If there were no BEE opportunities out there, I believe we would still be able to compete with the other investment houses.”

Its capital base and the quality of its management team would ensure this, he says.

Apart from the intention to exploit every advantage BEE gives it, there is nothing “BEE” about KTH’s strategic thinking. It is not interested in minority positions, says Nkonyeni. “We’re activist investors. This means we want to target companies where we can hold a meaningful equity position, ideally a controlling position, as with Servest, and influence the strategic direction of those companies.”

It does not mean getting involved operationally. The model is to let the management teams get on with delivering growth while KTH calls the shots at board level.

“We insist on having representation not only on the board but in key strategic sub-committees of the board such as auditing, risk and remuneration.”

Nkonyeni says KTH will use its influence at a strategic level to create opportunities for black industrialists through enterprise development.

“We want to drive investment in emerging suppliers, bring them into the value chain in areas such as tax, accounting and auditing.” —