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Oct 12, 2007

Ngcuka relishing his new challenge in SA's boiling construction economy

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There is life after politics and public service. Ask Penuell Maduna. Or Sipho Pityana. Cyril Ramaphosa. Saki Macozoma. Reuel Khoza.

Bulelani Ngcuka was not the first, and he certainly won’t be the last to make the transition from public office to the boardroom. The thing is his was probably the most high-profile move, and one which still remains cloaked in speculation.

One may wonder if he jumped or whether he was pushed when he closed the door behind him as the Scorpions boss, following a headline- carrying clash with former Deputy President Jacob Zuma – but to Ngcuka this little piece of nasty history has since lost all relevance.

He refers to his previous career as his “past life”. Now he is “just an ordinary boy from Middeldrift, struggling in a big town like Johannesburg to make ends meet”, he says from his office in Sandton.

Ngcuka, a lawyer by training, says one of the biggest challenges in doing business is the way people seem to grapple with his identity: married (for 22 years) to the country’s Deputy President, Phumzile Mlambo-Ngcuka, and being the man who once headed the Scorpions and the National Prosecuting Authority (NPA).

“It comes with challenges; some very serious challenges. I sometimes wish I was treated like every other ordinary citizen, and that I was able to pursue my interests just like every- body else, that, when I talk to you, you see the person I am and not the titles I may have held. I would like it if people could see me for who I am.”

Ngcuka’s current incarnation is as the executive chairperson of Vuwa Investments, where he is less likely to become the regular subject of front-page copy. “It’s a far cry from where I was, but I can’t deny I’m enjoying it,” he notes.

Ngcuka formed Vuwa just over 16 months ago, following his departure from Amabhubesi, the previous investment vehicle he partnered after entering the private sector.

To date, Vuwa has made 21 investments, most of them in the construction, healthcare, auto and property markets.

A HISTORY IN CONSTRUCTION

The landmark deal securing Ngcuka a spot on the business agenda was the acquisition of 51% of Basil Read.

Ngcuka and Mzi Khumalo (of Metallon) travelled to Paris to buy a majority stake in the then struggling construction company from French construction giant Bouygues.

They paid 82c a share, with Khumalo selling soon after (and to a public outcry as the investor community suspected him of looking for a quick buck), pocketing a neat profit of about R70-million in 2006. (This could have been much more if Khumalo had held on a little bit longer, as the Basil Read share price has rocketed from just over R9 in the last 12 months to about R32.)

'I feel good about the business. We have don well'


Securing funding for the deal was not easy, Ngcuka recalls, with all but one South African bank turning him down, citing Basil Read a poor investment.

A month after securing the deal with Bouygues, Ngcuka and Khumalo each sold 2,5% to Khaya Ngqula, the current South African Airways boss.

When Khumalo exited a few months later, he sold the bulk of his shares to the market, and a small percentage to Amabhubesi.

When Ngcuka left Amabhubesi, he took 4% of Basil Read with him to Vuwa Investments.

Today, Ngcuka is the chairperson of Basil Read.

“I feel good about the business. We have done well,” he says.

Ngcuka is also the chairperson of JSE-listed scaffolding specialist Top Fix. “We own 25% of that business.”

In addition to this, Vuwa owns 26% of two East Rand building material suppliers, Chrushcor and Benoni Sands, as well as 25,1% of another JSE-listed firm, Rolfes.

Rolfes, a diversified manufacturing and technology company, is hoping to cash in on the recent boom in the construction industry. Again, Ngcuka is the chairperson.

A FAMILY AFFAIR

“I have been interested in construction from a very young age,” says Ngcuka.

“My father was a carpenter by training, rising through the ranks to become a senior super- intendent in the Department of Public Works. He had the responsibility to oversee the building of new schools in the Eastern Cape.

“My younger brother started even earlier than I did. He still has his own construction firm down in the Eastern Cape.”

Ngcuka says one of the first things he did after leaving the NPA was an analysis of the South African economy.

He found construction to be one sector holding ample promise.

“Government was talking about investing in infrastructure – 2010 was coming up, the Gautrain was about to happen, (and) several investments in roads.

“We said it was only a matter of time before government would do so, and that we must position ourselves to benefit.

“We identified a company we thought was in trouble (Basil Read), thinking it was easy to go and take it.

“Others were very expensive, so we looked for a soft entry into the market and we found it.”

‘We’ refers to a few familiar faces that have come a long way with Ngcuka.

Lungisa Dyosi and Sipho Ngwema worked with Ngcuka when he was still the National Director of Public Prosecutions.

Dyosi was Ngcuka’s strategy and legal adviser, and Ngwema the voice of Ngcuka, as the head of communications of the Scorpions and the NPA.

Today, Dyosi and Ngwema are shareholders and directors at Vuwa Investments.

Vuwa’s other shareholders are Kennedy Memani, Dumisani Tabata, Gilimamba Mahlati, and Albert Nemukula.

‘MY BLOED IS BLOU’

Ngcuka is a Bryan Habana and a Blue Bulls fan. “My bloed is blou, and I hope yours is too.”

Maybe this is due to Vuwa owning 37% of sports and entertainment company Sail, which, in turn, owns 50% of the Blue Bulls Company, and 25% of Western Province Rugby.

Other investments include putting money down for five auto dealerships, while the com-pany also has a 50% share in a Port Elizabeth-based business – Coega Autospray – which spray-paints body parts for the Eastern Cape General Motors plant.

Vuwa has also invested in the agricultural sector. “One of the projects I have enjoyed very much is partnering with a group of white farmers to form Amadlelo Agri,” says Ngcuka. “It has been good to start something from nothing.”

Vuwa Investments owns 33% of the Amadlelo (grazing fields) dairy initiative.

The dairy is set to open on October 26 in Alice, in the Eastern Cape, and is a partnership between established white dairy farmers and rural communities.

“We decided to go into an area where there is no development, using the skills of experienced white farmers to set up a dairy in a rural area.

“We also partnered with the University of Fort Hare, in order to strengthen its department of agriculture.”

Ngcuka is keen on rolling out the initiative further, with a second dairy to follow in Middeldrift, where he was born, using a similar blueprint.

Other Vuwa investments include a 51% share in a Mr Price retail store in Maputo, Mozambique, and partnering to build a new regional shopping complex in Jeffreys Bay, in the Eastern Cape.

This is due to open next year.

Vuwa is also an empowerment partner to Old Mutual, PA Betterbond, and bond originator Betterbond. Ngcuka serves on the Growthpoint, and Mutual & Federal boards – as well as the Transnet board, which he regards as a public duty.

“Apart from Transnet, I do not serve on the boards of companies in which I do not have a business interest.”

It is difficult to determine from this very diversified portfolio what Vuwa could be looking at next, but Ngcuka wants to betray nothing of his future plans.

“We have an exciting pipeline of projects, but not anything we can talk about at the moment.”

He is willing to commit to the construction industry, though.

“I think that sector will still be good for at least another ten years. Property is also a good sector to be in.”

ON EMPOWERMENT, BUSINESS AND POLITICS

It wasn’t easy to change colours from a public servant to that of an executive chairperson, says Ngcuka.

“The terminology used in business is different from that in law. You come in and people talk about things like Ebitda – it takes some time to become familiar with business speak.

“It can be disempowering if you don’t understand what people are talking about.”

Another challenge, perhaps, stems from the fear of taking a phone call from the National Director of Public Prosecutions.

“You are used to people returning your calls. When you call, they call back. Now, they don’t return your calls, and they don’t give you appointments when you want to see them.

“You just have to understand that things have changed, that you have to fit into other people’s diaries, because you are the one who wants something.

”Ngcuka does not regret the move, though.


He also believes his timing was close to perfect.

“I’m fortunate. I came into business at a time when conditions [had] changed. When I came in, a number of black businesspeople had already established themselves.”

In fact, he adds, many of his business investments were made by invitation.

“Mzi Khumalo invited me to the Basil Read deal. For Growthpoint, it was Lazarus Zim. Patrice Motsepe invited me to do a deal in the Southern Cape. Saki Macozoma partnered us in Amabhubesi Investments. We did the Old Mutual empowerment deal with Sipho Pityana.”

Ngcuka says all these heavyweights were businesspeople long before he moved from the public service to the boardroom.

“They made my entry into the business world much easier than it would have been otherwise. It’s nice to see black guys networking like this, and not competing. They all go out and assist others.”

Another factor that aided his entry into business was corporate South Africa changing its mind about black economic empowerment (BEE).

“Business was uneasy about this ‘BEE thing’ at first, but by the time I came in, it was an accepted norm.

“Business initially looked at BEE as an act of compliance. Now, however, it is viewed as a business imperative. Now they say: if you want to grow, if you want to access new markets, such as the growing black middle class, you need to be empowered.

“There is a lot of goodwill in South African business.”

Commission for Employment Equity chair Jimmy Manyi may differ from Ngcuka.

He recently stated that all is not well with the scope and speed of the empowerment agenda.

What does Ngcuka say about the bout of bad press BEE suffered in the last few months?

“Rome was not built in a day. Yes, you’ll always find exceptions. You’ll find thousands of detractors, but millions who support empowerment.”

As to whether he would consider a career in politics or the public service again, Ngcuka’s answer is an emphatic ‘no’.

“I’ve had my fair share of politics, and I’m out of it. I’m content where I am. My role now is to provide support to my wife.”

Edited by: Martin Zhuwakinyu
Creamer Media Senior Deputy Editor
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