African Bank woes hit its black investors

were being generated by Abil as it made powerful inroads into the unsecured lending market.

As a pioneer in attempts to formalise this market, Abil enjoyed exceptionally attractive margins from a customer base that was predominantly black.

Eyomhlaba was launched in 2005 and expires at the end of next year. At that stage the shares will be transferred for Abil shares on the basis of 93 Abil shares for every 100 Eyomhlaba shares. Hlumisa was launched in 2008 after Abil issued shares to pay for the illfated R9-billion acquisition of Ellerines.

Together, Eyomhlaba and Hlumisa now hold a combined 5% of Abil — a figure that shrunk from about 9% before last year’s R5.5-billion rights issue. This is because the two schemes sold the rights to take up new shares, using the cash to reduce the debt.

The prospects for BEE investors are unclear. Analysts believe that after last week’s shock trading update, Abil might have to go cap-in-hand to investors to raise cash again.

When it comes to empowerment, another rights issue could result in the BEE schemes shareholding in the bank fall below 5% as it seems unlikely the two schemes will be willing to commit the cash to follow their rights.

Eyomhlaba’s net asset value, which is closely linked to Abil’s share price, slumped from R25.64 in December 2012 to R11.43 a year later. By March, that had dropped to R9.67.

Hlumisa’s shares also slumped during the past few years of trauma. Trading at R17.12 in December 2012, it had slumped to R7.62 a year later.

Abil’s two schemes are a timely reminder that public BBBEE share schemes are not without risk.