THE NATIONAL ASSEMBLY
QUESTION FOR WRITTEN REPLY
Question 1119
Dr C P Mulder (FF Plus) to ask the Minister of Trade and Industry:
(1)(a) How many transactions have taken place with regard to (i) Black
Economic Empowerment (BEE) and (ii) Broad-Based Black Economic
Empowerment (B-BBEE) in each year since 1 June 2004 to 31 June 2009
and (b) what is the total rand value of these transactions;
(2) How many individuals of the indicated group who are classified as (a)
Black, (b) Coloured and (c) Indian in terms of the Broad-Based Black
Economic Empowerment Act, Act 53 of 2003, have profited from BEE/B-
BBEE transactions;
(3)(a) What average financial gains in (i) shares and (ii) capital
payments have been paid to the beneficiaries with BEE/B-BBEE
transactions, (b) how many of these transactions have depreciated in
value after these transactions have been concluded and (c) what the
reasons are for the depreciation in the value of the
transactions?NW1384E
Response:
(1) the dti tracks the progress of BBBEE and related transactions through
a number of sources, amongst which is Ernst & Youngâs Mergers and
Acquisitions Annual report. According to this source, the following BEE
transactions took place since 01 June 2004 to 2008, the last period for
which data is available.
|Year |Number of BEE |Rand Value |
| |Transactions | |
|2004 |243 |R 49.9 billion |
|2005 |238 |R 56.2 billion |
|2006 |221 |R 56.0 billion |
|2007 |125 |R 96.0 billion |
|2008 |84 |R 60.9 Billion |
|Source : Mergers & Acquisitions : A review of |
|Activity for the year 2008 (18th Edition) by Ernst & |
|Young |
(2) It must be noted that since the gazette of the Codes of Good
Practice in February 2007, most BEE transactions started aligning with
the seven elements of the BBBEE Codes of Good Practice.
Although there is no specific statistics and numbers to classify
beneficiaries in accordance with the various classes of black people,
this trend towards broad-based BEE is indicative of the broadening of
the beneficiary base among black people (which is inclusive of
Africans, Coloureds and Indians). In particular, more and more black
people in rural areas, black women and disabled beneficiaries started
benefiting, through the creation of trusts and various foundations
under BBBEE deals, and more companies have sought to create inclusive
beneficiaries in BBBEE transactions.
(3) (a) (i) and (ii) Based on the Ernst & Young report, in 2008 alone, of
the 84 BEE deals already concluded, the 10 largest transactions
resulted in financial gain by black beneficiaries, compared to
transactions of earlier years, although the dti does not have precise
qualification of this. These transactions include, amongst others,
the following entities; MTNâs Alpine Trust, the MTN Asonge shares
facilitated by the NEF, Acquisition of Yebo Yethu in Vodacom (6.3%)
by Thebe and Royal Bafokeng, Nedbankâs Eyethu Shares, and the PIC
Acquisition of a shareholding in Afrisam.
As a result of these transactions, many designated beneficiaries stand
to realize and benefit value due to appreciation of shares in these
companies and subsequent payment of dividends. Although many other
deals were affected by the depreciation in value that was occasioned
by the global financial crisis, the above-mentioned deals were not
affected.
(3) (b) and (c): Although there is no specific detail on the number of
deals that were affected by the depreciation in value, it is important to
note that since most BEE deals structured between the period 2004
and 2008 were structured as Special Purpose Vehicle (SPVs) â where a
new company is created specifically for the BEE transaction, these
deals involved the acquisition of shares with no cash injection from
the BEE partners â but rather with financing coming from the banks,
depreciated as a result of high interests rates and share price
depreciation. The reasons for this depreciation have largely been
linked to the global financial crisis that saw contraction of a number of
sectors.