In South Africa’s largest-ever broad-based black economic-empowerment (BBBEE) deal, worth some R24-billion, petrochemicals giant Sasol, would on September 8, welcome about 300 000 ordinary South Africans as shareholders of the company.

In May, Sasol invited members of the South African black public to apply for up to 2 838 564 Sasol BEE ordinary shares (known as the cash invitation), and simultaneously, Sasol Inzalo, which at the time was a wholly-owned subsidiary of Sasol, invited members of the black public to apply for up to 16 085 200 Sasol Inzalo ordinary shares (known as the funded invitation). Together the new shareholders would hold a 4,5% stake in the group.

New shareholders would receive information booklets, which would be posted on Tuesday, and refunds to applicants, where applications could not be met in full, began on Monday evening and continued on Tuesday through electronic transfer. Shares would be allotted and issued on September 8, 2008.

Initially the company expected about 200 000 South Africans to take advantage of the deal. “We have been overwhelmed and humbled by the response from the public, certainly it has way exceeded our expectations in terms of interest, and subscription,” said Sasol CEO Pat Davies.

The deadline for applications was extended for three days in July, owing to the flurry of people who sought to be involved in the transaction.

Both the cash, and funded options of the BEE deal were extremely sought after, with the funded option more than 300% oversubscribed, and the cash offer 13% oversubscribed. This meant that, in order to satisfy as many applicants as possible, the transaction could not accommodate every applicant to their full expectation. The allocation model favoured women, the unemployed and the disabled.

"We are very pleased with the outcome of the allocation as we met our broad-based targets and still recognised the investment interest from applicants seeking larger numbers of shares," said Sasol executive director, Nolitha Fakude.

ALLOCATION OF SHARES

Sasol said that it accepted applications using a “bottom up” approach to prioritise the acceptance of applications for small numbers of shares, over those for large numbers of shares.

In the funded invitation, applicants could apply for a minimum of 25 Sasol Inzalo ordinary shares for an amount of R457,50. Applications for subscription amounting between R457,50 and R915 (for 50 Sasol Inzalo ordinary shares) were accepted in full.

Applications for 50 shares and more were allocated on a pro-rata basis. In the funded invitation, applicants received the number of shares applied for up to 50 shares and then, on average, 11,3% of the balance of the shares applied for.

In the cash invitation, applicants could apply for a minimum of 10 Sasol BEE ordinary shares for an amount of R3 660. Applications for subscription between R3 660 and R18 300 (or 50 Sasol BEE ordinary shares) were accepted in full.

Applications for 50 shares and more were allocated on a pro-rata basis. In the cash invitation, applicants received the number of shares applied for up to 50 shares and then, on average, 76,7% of the balance of the shares applied for.

“Deals like this one are very important to the transformation of this country. This deal has brought about 300 000 new shareholders to Sasol, and these are not investors that typically invest in the corporate world. These are ordinary South Africans, men and women, and you will be pleased, I’m sure, to see just how many women have participated,” added Davies.

Although Sasol’s black directors were approved participation in the cash and funded offers, and a number of them applied, some of them subsequently withdrew their applications to allow some of the smaller, more broad-based applicants the opportunity to participate.

Sasol could also not give any further specifics about the number of Chinese people who participated in the transaction, as they were defined as ‘coloured’, and statistics on that basis had not been drawn up.

The top three provincial allocations were to Gauteng at 45%, Mpumalanga at 19%, and KwaZulu-Natal at 15%.

The largest age group represented in the transaction was the 31 to 40 years group with 26%, followed by the 41 to 50 year old group at 23%, and younger applicants in the 22 to 30 age category, as well as the 0 to 21 category were the same at 16% each.

Females received 43,6% of the allocation, and female groups receiving 3,9%, while male individuals received 43% off the allocation, with male groups taking 9,5% of the allocation.

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.