South Africa’s Vodacom to increase black ownership

South Africa’s Vodacom Group said on Monday it would increase
the stake held by black shareholders by up to 6.25 per cent in a 17.5 billion
rand (1.34 billion dollars) black empowerment transaction.

Vodacom Group Chief Executive, Shameel Joosub said in
Johannesburg that the increase in existing scheme due to unwind in October,
would raise black ownership to 20 per cent.

Joosub said the increase was to enable the current black
shareholders in Vodacom South Africa and the newly formed staff scheme increase
their stakes in the firm.

“This amounts to 6.7 times the original capital that was
invested into the deal in 2008 and therefore has been one of the most
profitable and successful transactions concluded in South Africa,” Joosub said.

Under black economic empowerment rules, South African companies
are encouraged to meet quotas on black ownership, employment and procurement as
part of a drive to reverse decades of exclusion under apartheid.

Meeting government rules on black ownership makes a company more
likely to qualify for government tenders.

Petrochemicals and energy firm Sasol had in 2017, said it would
cover costs and pay bank debt related to a share sale from its Inzalo black
economic empowerment scheme after the share price slumped, leaving investors
unable to fully repay their debts.

Companies in South Africa are required to help increase black
ownership, often using vendor financing deals to sell shares to groups excluded
before 1994 under apartheid’s white minority rule.