The BEE Deal

In 2005 the Old Mutual Group announced three separate but inter-dependent transactions – one for each of its South African businesses (Old Mutual South Africa, Nedbank Group Limited and Mutual & Federal).

These transactions, worth a total of R7.2 billion, bring Old Mutual SA closer to achieving the Financial Sector Charter (FSC) target of 25% black ownership by 2008.

The deal also reflects our quest to become both national leaders in corporate transformation and a corporate citizen that is committed to matching the demographic profile of our nation in terms of our business partners, ownership and staff profile.

Financial Implications (as at 2005)

• R2 725 million for 25 530 Old Mutual SA, Nedbank Group Limited and Mutual & Federal employees.
• R2 522 million for an estimated 20 000 clients, union members and distributors.
• R1 692 million for some 500 000 shareholders, direct and indirect beneficiaries of the WIPHOLD and BRIMSTONE consortia.
• R150 million for community organisations throughout the country.

Ownership of Old Mutual South Africa

The deal resulted in 13.5% of Old Mutual SA being transferred into the hands of black South Africans. These partnerships were achieved through the issuing of new Old Mutual plc shares to a number of different groups.

Partners

The nature of a broad-based black empowerment deal is one that is structured to empower and benefit people across the spectrum. Old Mutual Group has achieved this by ensuring that this 13.6% ownership transfer benefited the following groups:

• WIPHOLD Consortium

  The WIPHOLD Consortium is headed by the WIPHOLD Group that was founded 10 years ago by four women and is dedicated to women’s empowerment. WIPHOLD is a majority black-owned company and in excess of 60% of its shareholding is in the hands of women.

  The WIPHOLD Consortium comprises:

  • The WIPHOLD Group - a broad-based black empowerment company in with:
    • 1 200 direct beneficiaries.
    • 18 000 indirect beneficiaries through the WIPHOLD Investment Trust.
    • over 300 000 indirect beneficiaries through the WIPHOLD NGO Trust.
  • Sphere Holdings - a new generation empowerment company with a firm emphasis on broad-based empowerment. Particular focus is placed on education and the economic upliftment of black women.

  As a part of the deal Old Mutual (SA), has an effective 32.5% stake in WIPHOLD, demonstrating the strength of its existing relationship.

  Business Activities

  WIPHOLD Consortium's current business activities include:

  • Financial services.
  • Ownership of infrastructure assets.
  • Diversified investments.
  • Private equity management.
  • Investment banking and,
  • Asset management.

  Download

  WIPHOLD Consortium Company Profile (161 kb pdf)

• BRIMNSTONE Consortium

  The BRIMSTONE Consortium is led by BRIMSTONE, a JSE-listed investment vehicle for black South Africans. The company’s mission is to be profitable, empowering and to have a positive social impact on the businesses and individuals with whom it is involved

  The company has a black board of directors and operational management is in black hands. In 2005 52% of ownership was held by 3 700 black South African’s.

  The BRIMSTONE Consortium comprises:

  • BRIMSTONE Investment Corporation.
  • Mtha-we-Mpumelelo which is comprised as follows:
    • Chestnut Hill.
    • Izingwe Financial Investments.
    • Black Lawyers Association.
    • South African Mediacal and Dental Practitioners.

  Business Activities

  • BRIMSTONE Investment Corporation has investments in the following sectors:
    • Financial services.
    • Healthcare.
    • Industrial.
  • Mtha-we-Mpumelelo includes the investment vehicles of three broad-based groupings that represent black professionals namely:
    • The Black Lawyers Association that  represents around 900 black legal professionals and 300 legal students. This voluntary association supports and developes black lawyers. In addition, it provides legal services to the black community.
    • The National Association for Democratic Lawyers. This voluntary organisation's  primary goal is providing access to justice for previously disadvantaged individuals.
    • The South African Medical and Dental Practitioners Council represents black medical and dental practitioners and is an active player in the transformation of the health industry.

  Download:

  BRIMSTONE Consortium Company Profile. (260 kb pdf)

• Staff Share Schemes

  The majority of the shares allocated in terms of this deal – worth R1.7 billion  – were given to current and future black employees of Old Mutual South Africa (Old Mutual SA).

  We believe that ownership motivates employees to achieve performance excellence. These higher levels of performance feed through to our customers and to other shareholders. This ultimately helps to grow our business and contribute to economic growth and social development in South Africa.

  There are three staff schemes:

  • A Management plan.
  • A senior black management plan.
  • A broad-based staff scheme.

  Management Plan

  A total of R1.25 billion in Old Mutual plc shares were issued and placed in a Trust to fund black management share options over a period of ten years.

  Reserving a significant number of shares for black management demonstrates our unequivocal commitment to transform our business fundamentally. In other words, we expect our black management complement to grow very quickly and the allocation of these shares anticipates that.

  Senior Black Management Scheme

  This was a once-off grant to senior black management within Old Mutual SA. About 50% of the shares were for retention purposes and 50% were held back for future awards for the attraction and promotion of black management.

  The share awards were based on performance and participants are tied in to Old Mutual's employment for a defined period of time.

  Broad-based Staff Scheme

  Each participant received a once-off share award of Old Mutual plc shares worth R7.500.00 per participant. This scheme operates for the benefit of all employees of Old Mutual SA – both black and white – who had not previously participated in any other share schemes.

  The share awards vested immediately but participants will only take delivery of the relevant Old Mutual plc shares after five-years (2010).

• Communities & Distributors

  A key focus of this empowerment deal was to spread benefits to as broad a range of people as possible. This is because Old Mutual believes in making clear and tangible contributions to the economy by addressing some of the pressing socio-economic issues we face as a country.

  This component of the deal responded to two specific national challenges: those of education and the development of small, medium and micro enterprises (SMME’s).

  • The Old Mutual Education Trust provides for bursaries for members and relatives of a selection of trade unions.
  • The Black Distributors Trust provides finance to black entrepreneurs who are registered financial services providers.