Trading places in Sasol BEE stock
AS the Financial Services Board contemplates what to do about the robust over-thecounter trading in broad-based black economic empowerment (BEE) shares, it should consider undertaking a detailed comparative study of Sasol’s two empowerment vehicles – Sasol Inzalo and Sasol BEE.
Such an exercise would have to allow for the differences between the two entities, the most significant of which is that Sasol Inzalo has hefty debt and Sasol BEE is debt free.
Sasol Inzalo investors paid an average of R22 a share for Sasol shares that were trading then at just over R400. At the end of the empowerment period, which is 2018, Sasol Inzalo shares will be converted into Sasol shares after repayment of whatever debt remains.
By contrast Sasol BEE merely involved the offer of a discount on Sasol’s trading price. In 2018, these shares will be converted into Sasol shares on a one-for-one basis.
For whatever reason, in 2011 Sasol opted to list Sasol BEE on the JSE, where it is the lone counter in the bourse’s muchtouted BEE sector. By contrast, it allowed Sasol Inzalo to trade over the counter using the platform of Equity Express. Sasol BEE has led a dull, barely traded existence on the JSE while Sasol Inzalo has been one of the highlights of the over-thecounter BEE trade.
Not all of this difference can be put down to the fact that Sasol Inzalo, with more debt, is a more speculative investment.
Much of the difference could be because it is extremely difficult – and expensive – to trade in Sasol BEE shares.
Some of this difficulty stems from Computershare’s role as gatekeeper. Also, trading has to be done through a broker, unlike the over-the-counter market, where the certified BEE entity can trade directly.
After finding one of the very few brokers who are prepared to trade in Sasol BEE, you have to fill out an overwhelming volume of documents before you can actually trade. No wonder there’s so little activity.
The Financial Services Board will have to come up with something much better if it intends forcing BEE schemes into a regulated space. Unless its plan is to minimise all risks by killing BEE share trading.