BEE Deal Structuring - Phatisa Advisors and Phatisa Agri Business, South Africa
Phatisa has financially engineered an innovative BEE ownership solution, driven by the guiding principles that existing shareholders are reluctant to give away value, yet recognising that BEE partners have limited financial resources. Our solution does not rely on special purpose vehicles and is compliant from day one in terms of the BEE Act, the Charters and the Codes. Through established relationships with broad-based, black women’s group, Lidonga Group Holdings Limited, Phatisa can optimise your score card points’ allocation, including new entrants, procurement facilities, as well as workers’ trusts.
The Phatisa Ownership Solution, with careful attention to the appointment of HDI directors, means a possible maximum 27 points are available on the Generic Scorecard (as defined by the DTI Codes of Good Practice). Typically, Phatisa helps the suppliers of major corporates improve their BEE score card. For procurement purposes, this would provide such corporates with over 41% of the points required to achieve the 65 points needed to become a level 4 contributor on equity alone, meaning the downstream buyer can measure 100% of the purchases from its suppliers.
Phatisa manages the entire BEE process on your behalf – from structuring a customised deal, identifying an appropriate BEE partner who can add value, negotiating expansion finance and assisting on tax and legal issues, through to developing the skills of your BEE partner.
Phatisa will remain with you throughout the journey. We do not just provide a BEE solution and then walk away, but using our private equity skills we provide an ongoing 'portfolio management' service to your BEE partner. The result is that we make sure the BEE solution works for you into the future.
Do you qualify?
- Are you concerned about how BEE could affect your business?
- Are you ready to embrace a BEE partner?
- Are you looking to empower your employees?
Would you be willing to sell equity to a BEE partner and/or your employees?
- Are you the principal owner of a successful business in South Africa?
- Does your business have a good track record of success?
- Does the business have a strong route to market?
- Will your customers start questioning your empowerment credentials?
- Is there little or no medium or long term debt in your company?
- Would you welcome a professional business partner to advise you on financial matters?
- Would you be interested in a partial exit for cash?
- Do you want to resolve your succession planning strategy?
- Is there a desire to comply with the BEE Act, Charters and Codes?
- Are you ready to embrace the New South Africa?
If most of your answers are 'YES', then perhaps we have the solution for you.
Doing the groundwork
To ensure that we create the right structures for each deal, we consult with a leading Johannesburg corporate tax and legal firm on specific issues such as:
- Companies Act No. 61 of 1973 – Section 38 (Financial Assistance);
- VAT and transfer duty;
- Capital Gains Tax, dividend distribution/STC liabilities and tax deductibility of interest on loans – Section 45 of the Income Tax Act;
- Shareholders agreements – board formalities, special resolutions and minority interests;
- Share sale and purchase agreements;
- Workers trust agreements;
- Implementation;
- The Broad-Based Black Economic Empowerment Act No. 53 of 2003;
- Various sector charters; and
- The DTI Codes of Good Practice on Broad-Based Black Economic Empowerment.
BEE in the rest of Africa
Whilst Phatisa’s primary BEE focus has been the South African market, we are rolling out our products to other African countries, which are undertaking 'indigenisation' programmes.
