Lack of information challenges BEE share schemes - CNBC Africa

Lack of information challenges BEE share schemes

Southern Africa

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Share information. PHOTO: Getty Images

“We’ve recently seen Imperial with their Ukhamba deal come to the markets. They opened up their Black Economic Empowerment (BEE) scheme to the public. That wasn’t a public scheme to start off with, I think it was largely a staff scheme,” Gradidge-Mahura Investments co-founder Craig Gradidge told CNBC Africa on Monday.

“It’s good because it offers black shareholders another option and allows them to diversify their portfolios even further by having these schemes. Hopefully it is the start of a broader trend.”

Shareholders struggle to gain more information on what they invested in within the schemes. Information regarding shares is also not always suited to the shareholder’s understanding.

“Imperial was the first one, hopefully the first of many. It didn’t start out as a public deal but it has become available through an OTC platform, it has become available to the public,” Gradidge explained.

“There has been a lack of education and understanding. You would see [that in] the prospectus they would issue very difficult [language] for a person to understand.”

Gradidge added that there has however been an improvement in the relaxation of restrictions, and the media is able to cover and largely investigate Black Economic Empowerment shares. Financial and investment planning can also be given to shareholders.

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“From our side, we look at the financial planning context an investment into the shares should be made. It’s not point having young kids and no risk cover, and you have 1,000 Sasol and Inzalo shares,” said Gradidge.

Other BEE share schemes include Sasol’s Inzalo, Media24’s Welkom Yizani and Vodacom’s Yebo Yethu.

MTN’s Zakhele shares, which officially began trading this morning, have had a positive uptake so far.

What remains a challenge is that the value of shares cannot always be determined. This is a a difficulty for both shareholder and scheme.

“When it comes to any advice on what the price is, we really cannot do that. We’ve shared what the net asset value per share is, based on our latest financials, and that’s the best guidance that we could give shareholders,” said Thulani Gcabashe from MTN Zakhele. 

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