A new kind of BEE investment
Bayhill aims to encourage people who have been intimidated by the rarefied air of the JSE to invest in shares
Soon, African Rainbow Capital (ARC) won’t be the only choice of diversified black empowerment plays.
The Bayhill Transformational Investment Portfolio (TIP) lists on ZAR X this month.
It will make an intriguing stablemate to the former agricultural co-operatives that are
ZAR X’s core offering.
Bayhill started life as a private client fund manager in Durban, but its recent parent company, the Peregrine Group, has more than enough private client capacity through its Citadel brand.
Peregrine CEO Rob Katz says Bayhill was a logical vehicle for a BEE business, and the African Finance Group under Gil and Vuyo Mahlati became the largest shareholders.
Gil Mahlati, now Bayhill’s chairman, was a surgeon who specialised in liver transplants, and a veteran of negotiating BEE deals with large companies such as Old Mutual, Nedbank, Aspen Pharmacare and Clicks.
Bayhill retains a wealth management division, but the main focus will be on the new investment company.
The investment committee has an eclectic mix of talent, including George Herman, chief investment officer of Citadel; Kgomotso Matseke, the former head of Kagiso Trust Investments; and Kagisho Mahura, former head of marketing at Coronation and now a successful financial planner.
While the focus at ARC is to buy holdings in established businesses such as Alexander Forbes and Afrimat, Bayhill TIP’S main business will be to swap holdings in BEE schemes for Bayhill TIP shares.
“We will simplify access to capital for scheme members who might have to wait another seven to 10 years for their payout. And in the case of the Sasol Inzalo scheme, it was still out of the money on closure and lapsed. We also provide diversification to shareholder portfolios,” says Mahlati.
He argues that R400bn is locked into corporate BEE schemes. There are 14 large schemes on Bayhill TIP’S radar, including Anglo
HARVESTING
American, Exxaro, Mediclinic and Resilient.
The 14 it is tracking have R90bn embedded in BEE schemes.
Bayhill MD Geoff Blount says ZAR X was chosen because, unlike the JSE, it uses a pre-trade compliance system which can classify investors as qualified (black) and unqualified (other).
At all times qualified investors need to make up 51% of the shareholder base. ZAR X runs on an immediate settlement basis, unlike the JSE’S trade plus three days (T+3) system.
This simplifies things for shareholders who need money immediately, and keeps down the cost of the exchange. Bayhill is raising just R50m on ZAR X, but Blount says that it will not be capital hungry in the early stages when it will be making cash-neutral swaps of its paper for BEE scheme rights.
Of course it is not a charity: Bayhill TIP buys assets even below their fair value after a BEE discount, and benefits from the closure of the BEE discount over the years to maturity, which the original scheme owner was meant to enjoy.
Bayhill TIP also aims to encourage people to invest in shares who have been intimidated by the elitist, rarefied air of the JSE. The aim is to