Bank employees to benefit from BEE transaction
• Empowerment deal sees 7% of company ’ s shares in the hands of staff and community beneficiaries
In March 2023, Absa announced the implementation of an R11.2bn broad-based black economic empowerment deal. The transaction took more than five years to structure and implement and represents the final element of Absa’s transformation following Barclays ’ exit as a shareholder in 2017.
In naming the scheme eKhaya, meaning “home” in Zulu, Absa captured the opportunity that has been created for each colleague to own a portion of the Absa home.
The transaction entails the issuance of 5.5% newly issued shares, and ultimately amounts to a 7% shareholding allocated to staff and community beneficiaries as follows:
● A 4% evergreen corporate social investment (CSI) component, which will benefit primary black beneficiaries of selected education and youth employability programmes in SA;
● A vesting staff element, which benefits all eligible permanent employees:
* All of Absa’s about 26,000 eligible employees in SA, irrespective of race, background or seniority, will participate in a 3% equity settled staff scheme. Black employees will receive an additional 20% allocation — reflecting just over 82% of the value of the staff trust. All staff in the 3% component will receive an annual dividend equal to 25% of the dividend per share paid by Absa Group. The shares will vest after a five-year period.
* Staff employed by Absa’s subsidiaries in all other African countries and international operations, of which there are 14, will participate equally in a cash-equivalent staff scheme, equivalent to about 1% of the Absa Group’s market capitalisation.
The 7% or 62.6-million Absa shares include the existing 16-million held by the Staff Trust via a special purpose vehicle, Newshelf 1405. A portion of these shares were received from the Barclays separation, and 46.6-million new Absa ordinary shares were issued to the SPV at an issue price of R178.11, valued at R8.3bn.
The transaction will directly impact about 35,000 people employed by Absa, and impact a broader constituency across SA through the CSI Trust. The transaction is expected to exceed the 25% threshold set out in the Financial Sector Charter.