| Thu 3 Apr 2003, 10:05 | | Standard Bank Group Limited - Formation Of A New E |
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Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registered number 1969/017128/06)
Share code: SBK Namibian Share code: SNB
ISIN: ZAE000038873
("Standard Bank")
FORMATION OF A NEW EMPOWERED FINANCIAL SERVICES COMPANY
1. Introduction
Standard Bank has entered into a memorandum of understanding ("MOU") with a
Consortium led by Mr Ronnie Ntuli and Safika Holdings (Proprietary) Limited
("Safika") and including Simeka Investment Holdings (Proprietary) Limited
("Simeka") and a broad based empowerment trust ("the Consortium"). In terms of
the MOU, Standard Bank and the Consortium will jointly create a new empowered
financial services company to be named Andisa Capital (Proprietary) Limited
("Andisa Capital" or the "Company") (the "Transaction").
2. The Consortium
The Consortium is a limited liability company whose membership comprises
parties from the empowerment sector of South Africa. A brief summary of the
credentials of the members of the Consortium has been set out below:
2.1 Nduna Trust
The Nduna Trust will have a 29% shareholding in the Consortium. The Nduna
Trust is led by Mr Ronnie Ntuli who, through his investment in a corporate
finance advisory business, Nduna Advisory Services (Proprietary) Limited (in
which the aforementioned trust held a 50% interest), has established himself as
a respected adviser to both South African and international corporates and
investors on investment strategy in Africa. Mr Ronnie Ntuli recently completed
two terms as President of The Johannesburg Metropolitan Chamber of Commerce and
Industry and serves as director on a number of boards.
2.2 Safika
Safika is an investment holding company, which focuses on making strategic
investments and assisting with the management of such investments. It actively
facilitates greater black shareholder participation in South Africa"s economic
evolution, ensures black economic prosperity by forming strategic alliances and
acquiring significant interests in viable business ventures and promotes black
business empowerment and constructive community involvement. Safika has
investments in the fields of communications, infrastructure, human capital,
resources and financial services. Safika will have a 29% shareholding in the
Consortium.
2.3 Simeka
Simeka, which will own 10% of the shares in the Consortium, is an investment
holding company which provides management consulting, training, capacity
building, employee benefits solutions, communications, marketing and asset
management services to the Government of South Africa, public sector
organisations and international agencies.
2.4 A broad based empowerment trust
This trust will be created for the benefit of organisations representing
broad based communities from historically disadvantaged backgrounds. The
principal beneficiaries of the broad based trust will be disabled people,
veterans of the struggle against apartheid, a women"s grouping and a finance
scholarship trust. This broad based trust will be the single largest shareholder
in the Consortium with a 32% shareholding therein.
3. Rationale for the Transaction
The rapid transformation of South Africa"s social, political and economic
environment requires that business positions itself at the forefront of this
process in order to reflect the broader socio-economic changes, while continuing
to deliver shareholder value and increasing market share. It is the view of
Standard Bank that transformation is a national and business imperative.
Standard Bank is actively involved in the process of transformation to ensure
that its subsidiaries and associates support South Africa"s socio-economic
objectives and participate in the new and exciting challenges and opportunities
being presented.
The Transaction establishes an empowerment partnership between the Consortium
and Standard Bank that will create an independent and diversified financial
services company reflecting the demographic composition of South Africa in
respect of its ownership, control and management.
4. Key terms of the Transaction
4.1 Shareholdings
The Consortium will acquire 51% of the issued share capital of Andisa
Capital while Standard Bank will acquire 49% thereof. The value at which the
Transaction is to take place has not been finalised (refer to paragraph 5
below).
It is envisaged that an employee incentive scheme will be established for
the incentivisation of the employees of Andisa Capital. Accordingly, and to the
extent necessary, the current shareholding in Andisa Capital may be
restructured. However, in line with Andisa Capital"s skills development
strategies, the Company will continue to be black controlled in terms of
ownership and operations.
4.2 Acquisitions
Andisa Capital will acquire from Standard Bank the agency business of SCMB
Securities (Proprietary) Limited ("SCMB Securities") and the entire business of
Standard Risk and Treasury Management Services (Proprietary) Limited ("SRTMS"),
including its wholly-owned subsidiary that has recently commenced operations in
Botswana. The value at which the Transaction is to take place has not been
finalised (refer to paragraph 5 below).
The agency business of SCMB Securities is made up of the private client
discount broking offering of Standard Bank as well as its wholesale broking
business and all necessary support functions. The Transaction provides the
opportunity for SCMB Securities to access additional transaction flows from new
and existing clients.
SRTMS provides a full range of risk and treasury management services,
assisting clients with the identification, quantification and management of a
variety of complex risks. Foreign exchange, funding and commodity transactions
are executed as agent on behalf of clients, as are all back office functions.
Although SRTMS already has the appropriate empowerment profile with respect
to its staff, the Transaction will provide SRTMS with a significant competitive
advantage with respect to future business opportunities. It is envisaged that a
key source of future business for SRTMS will be government departments,
parastatals and clients in the mining and mineral resources sector.
4.3 Additional businesses
In addition to the businesses to be acquired from Standard Bank it is
envisaged that Andisa Capital will establish private equity and corporate
finance divisions. The establishment of these divisions will enable Andisa
Capital to capitalise on opportunities that are likely to arise from a
combination of the Standard Bank brand and a credible, competent and empowered
financial services company. Andisa Capital intends to grow organically as well
as through the acquisition of businesses that operate in the arena of investment
banking.
4.4 Management support
A service level and skills development agreement will be put in place to
ensure that Andisa Capital has access to sufficient support from Standard Bank
to develop into a fully-fledged independent investment banking group.
The services that are to be provided by Standard Bank to Andisa Capital, on
an arms length basis, include, inter alia, information technology, human
resources, risk management and financial management support.
In terms of the skills development agreement, Standard Bank will make
available to Andisa Capital skills development programmes and other processes
currently used by Standard Bank such as:
* strategy development and implementation;
* access to control and approval procedures and processes; and
* executive, management and graduate development programmes.
4.5 Directorship
The Consortium will have the right to appoint the majority of the board of
directors of Andisa Capital, together with the Chief Executive ("CE"). The CE of
Andisa Capital will be Mr Ronnie Ntuli and the non-executive Chairman will be Mr
Saki Macozoma.
In addition to the services and programmes referred to in paragraph 4.4
above, Standard Bank will support the growth and development of Andisa Capital
through the appointment of key representatives from Standard Bank to the board
of Andisa Capital. In addition, Standard Bank will have the right to appoint the
Chief Operating Officer of Andisa Capital.
4.6 Exclusivity
The Consortium and the key shareholders of such have undertaken in favour of
one another and Standard Bank that their investment in Andisa Capital will
represent their exclusive participation in investment banking in South Africa.
Standard Bank, in turn, has undertaken that its investment in Andisa Capital
will represent Standard Bank"s exclusive empowerment offering with regard to
investment banking in South Africa.
The agency business of SCMB Securities will continue to provide Standard
Bank"s private bank and SCMB"s treasury with stock broking execution services.
4.7 Funding
Standard Bank will provide funding to the Consortium for the purchase of 51%
of Andisa Capital on commercial terms.
4.8 Resultant shareholding structure
The resulting ownership structure of Andisa Capital subsequent to the
implementation of the Transaction is set out below:
Standard Bank Consortium
49% 51%
Andisa Capital
Andisa Andisa Andisa Andisa
Securities(1) Treasury Services(1) Corporate Finance(2) Private Equity(2)
Notes:
The business that Andisa Capital will conduct will not initially require it
to be registered as a bank in terms of the Banks Act, 1990.
(1) The businesses acquired from Standard Bank will be rebranded to reflect the
new owner.
(2) To be established.
5. Related party
Mr Saki Macozoma, a director of Standard Bank and Safika, is not a related
party in terms of the Listings Requirements of the JSE Securities Exchange South
Africa. Notwithstanding this fact, the Consortium and Standard Bank have
appointed an independent expert to value the businesses of SCMB Securities and
SRTMS for the purposes of the Transaction. Although the valuation has not been
finalised, an indicative aggregate value for the businesses of SCMB Securities
and SRTMS ranges from R40 million to R60 million.
6. Conditions precedent
The Transaction is conditional upon the fulfilment of, inter alia, the
following conditions precedent:
* the completion of the independent valuations of SCMB Securities and SRTMS to
determine the price at which the Transaction will take place;
* the conclusion of formal agreements to give effect to the Transaction;
* approval by the Competition Authorities, if required; and
* all other required statutory and regulatory approvals being obtained.
Standard Bank shareholders will be notified in due course as to the
fulfilment of the conditions precedent and the completion and implementation of
the Transaction.
Johannesburg
3 April 2003
Merchant bank and sponsor
SCMB
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
(Registration number 1962/000738/06)
Attorneys
Bowman Gilfillan
John& Kernick * Findlay& Tait
