Emerging investment holding companies transforming South African business landscape

Mar 27, 2018

JOHANNESBURG: Today many of South Africa’s first generation of black economic empowerment (BEE) transactions have matured, producing a second wave of black-owned and operated businesses. A significant number of these companies have the capital, management expertise, insight and ability to transform the nature and profile of corporate investment required to reignite economic growth, alleviate poverty and reduce inequality.

“Many of the BEE investment companies that Standard Bank financed historically have today blossomed into independent companies - putting their own capital into transactions aimed at achieving clear and ambitious business visions,” says Yusuf Noorbhai, Senior Executive, Corporate and Investment Banking for Standard Bank. 

Critically, many of these visions include deliberate social transformation mandates, pointing to a new independently-driven momentum of inclusive growth in South Africa. 

This evolution has seen Standard Bank’s relationship with emerging South African investment holding companies develop from initial financing - to the full range of investment banking services and corporate advisory required by rapidly expanding businesses. Apart from increasing the bank’s own relevance and offering to these businesses, “we have also gained insights into how to achieve real transformation in the South African economy - through the creation of financially and strategically independent black-owned and operated investment holding companies,” adds Mr Noorbhai.   

A case in point is WDB Investment Holdings (Pty) Limited (WDBIH), a longstanding client of Standard Bank. 

Established in 1996, WDBIH is a women-founded, led and operated investment holding company. WDBIH focusses on strategic and transformational investment in both listed and unlisted companies in the financial, consumer goods and services, diversified industrial services, telecommunications, media and technology sectors. Standard Bank has, over the years, supported WDBIH in several transactions aimed at achieving the economic and social advancement of women in South Africa through transactions delivering broad social impact across several of WDBIH’s targeted sectors. 

In July 2017, Standard Bank provided a funding package for WDBIH to purchase a 25% stake in Tsebo Solutions Group (Pty) Limited (TSG), a leading facilities management company in South Africa.

Tsebo, also a long-time partner of Standard Bank, has a proud record of empowering communities, developing its employees, maintaining a broad-based shareholding and enhancing transformation. 

The transaction, the largest unlisted investment concluded by WDBIH to date, will see WDBIH hold two seats on the Tsebo board enabling it to actively support the future growth of Tsebo as it strives to be a leading facilities solutions provider across the African continent.

At a time when South Africa is seeking to transform its economy to include historically excluded communities by supporting initiatives like the Black Industrialists Programme, Standard Bank is well placed to leverage its long-established empowerment relationships to inform and support this process. 

Critically, today, “these relationships have moved beyond support - to partnership - as empowerment clients approach us with well-articulated strategies to deploy their own capital for growth and global expansion – aimed at empowering historically excluded communities” says Mr Noorbhai. 

This emerging trend represents hope that South Africa can generate growth capable of engaging all our people in meaningful economic participation in this country and across this continent we call home. 

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