Old Mutual okays new Bula Tsela black empowerment share scheme


Old Mutual shareholders have approved the broad-based black economic empowerment (B-BBEE) ownership scheme.  The new empowerment transaction will lift black ownership in the insurance giant from 25 per cent to over 30 per cent.

Earlier this month the B-BBEE Commission’s National Status and Trends on B-BBEE Transformation Report for 2021 revealed that black ownership levels across all entities dropped from below 30 per cent in 2021 to 29.5 per cent, down from 31 per cent in 2020.

  • Old Mutual shareholders approved the broad-based black economic empowerment (B-BBEE) ownership scheme on Friday, 12 August
  • Aptly named Old Mutual Bula Tsela (pave the way in Sesotho), the deal will enable qualifying Black South Africans, including Old Mutual employees, to share in the success of the company
  • Earlier this month the B-BBEE Commission’s National Status and Trends on B-BBEE Transformation Report for 2021 revealed that black ownership levels across all entities dropped from below 30 per cent in 2021 to 29.5 per cent, down from 31 per cent in 2020

At 12.4 per cent, the ownership levels for black women in the county, according to the report, were even more worrying (down 2.6 per cent from 2020).

Qualifying Black South Africans, including lower-income earners and Old Mutual employees, will now be able to buy the insurance giant’s shares at relatively low prices through its newest black empowerment-focused ownership scheme, Bula Tsela, meaning ‘pave the way’ in Sesotho.

According to an article by FA News published on August 15, 2022, the deal is a major milestone in South Africa’s B-BBEE history, making Old Mutual the first insurer in South Africa to facilitate an offer of shares directly to the Black South African public, including lower income earners. According to the group, the new scheme will help it achieve at least 30% black ownership.

Nasdaq in an article dated April 20, 2022, said the move is classed as Black economic empowerment (BEE) transaction, a government initiative to reverse ongoing economic inequalities almost three decades after the end of apartheid, encouraging companies to meet quotas in areas including Black ownership, employment, and procurement.

“This deal underpins our firm belief that real transformation is necessary to sustain business growth and serve the best interests of all South Africans,” CEO Iain Williamson said in a statement.

“Through this Old Mutual Bula Tsela Retail Scheme, we will give our people the opportunity to become (indirect) owners of the company they love and trust,” he added.

The new shares will constitute approximately 4.36 per cent of Old Mutual’s current issued share capital and 4.18 per cent of the enlarged share capital.

“On June 26, 2018, we came back home and are now firmly anchored in the continent we love, driving her growth and developing innovative solutions for her people. Since moving our primary listing, we have acted fast to re-align and cement our business objectives, having developed a strategic framework to ensure we are our customers’ most trusted lifetime partner,” the CEO said.

“Transformation is a key component of our strategy and journey as a trusted partner in Africa. We want to play a significant role in broadly driving growth and transformation. Now, we’re inviting our key stakeholders to join us as we work to ‘open the way’ and make a real, sustainable difference to their lives and livelihoods through this share scheme,” concluded Williamson.

  • The Imfundo Trust, Old Mutual Investment Group’s scholarship initiative aims to provide funding for students with a particular interest in the investments industry thereby supporting its transformation.
  • Customized funding solutions to black-owned small businesses, either for asset finance, working capital, or both through the Group’s Masisizane Fund.
  • The successful conclusion of the sale of a 21 per cent stake in Futuregrowth Asset Management to African Women Chartered Accountants (AWCA) Investment Holdings to increase the pool of Black women-chartered accountants in South Africa while growing Black ownership in the financial services sector.

According to an article by FA News published on August 15, 2022, this transaction follows the more than R7.9 billion value created when Old Mutual’s 2005 B-BBEE deal matured in 2015. It also builds on the immense successes Old Mutual is achieving in driving broad-based transformation through initiatives such as:

In a related article by Money Web dated August 16, 2022, the scheme is scheduled to be fully implemented by the end of December, and it allows qualifying applicants to buy a minimum of 200 retail scheme shares at a total upfront subscription cost of R2 000.

Applicants who cannot afford the above upfront subscription will be allowed to apply for a maximum of 100 retail scheme shares for a total subscription price of R1 000; this entails an upfront R100 payment, with the rest split over 12 months. According to the insurer, 10 per cent of the retail part of the scheme is set aside for these applicants.

The Old Mutual Bula Tsela Retail Scheme will open on August 22, 2022, with applications closing on October 24, 2022.

However, Old Mutual says that applicants cannot choose the scheme they want to subscribe to. Instead, the insurer will apply its discretion to match applicants with schemes they qualify for.

The weighted average number of shares (WANS) used in the Adjusted Headline Earnings per share calculation is 4,558 million (FY 2020: 4,574 million). 2 FY 2020 amounts have been re-presented to account for the use of the accounting consolidation method. 3 These metrics include the results of Zimbabwe. All other key performance indicators exclude Zimbabwe. (Photo/ Old Mutual)

Meanwhile, according to an article by Independent Online published on August 12, 2022, Old Mutual results from operations were expected to be between R3.88 billion and R4.32 billion in the period, the group said in a trading statement. The interim results are expected to be released on August 30. While, adjusted headline earnings were expected to range between a 17 per cent decline and a three per cent increase, to between R2.4 billion and R2.98 billion.

Additionally, headline earnings were expected to be 53 per cent to 73 per cent higher at R4.82 billion to R5.5 billion. Headline earnings were higher because adjusted headline earnings excluded earnings from operations in Zimbabwe, adjustments in equity and debt instruments held in life funds, and the impact of restructuring.

Earnings and adjusted earnings were primarily driven by the deferred tax associated with the unbundling of Nedbank, as well as an increase in respect of equity and debt instruments held in life funds.

Read: VFEX plans to list an Exchange Traded Fund linked to suspended Old Mutual, PPC shares

Albert is a Chemical Technologist and Author. He is passionate about mining, stock market investing, Fintech and Edutech.

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