| Fri 20 Jun 2003, 11:03 | | Glenrand upbeat on charter despite snub by Kunenes |
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Broker group admits to temporary setback
Financial Services Correspondent
ALTHOUGH Glenrand MIB's empowerment drive suffered a setback yesterday, CEO David Harpur said the broker group was looking at selling between 20% and 30% of its business to an empowerment partner.
Glenrand's empowerment efforts were temporarily set back as its largest single black shareholder, the Kunene Brothers Trust, vetoed the option of upping their stake from 6,2% to just under 10% during this year.
Rather, the Kunenes want to be granted the option to buy the 3,1% next year, which threatens to pull Glenrand behind the empowerment curve as the charter is launched.
An empowerment charter for the financial sector is expected to be launched within the next few months, and financial services firms have been jostling for deals designed to boost their empowerment status.
The most recent empowerment deals include asset manager Stanlib and Investec Bank.
"The Kunenes' decision may be a temporary setback with regard to our equity ownership, but there are many other aspects to empowerment within the group which continue unabated," Harpur said.
He said that in the financial sector, too much emphasis had been placed on equity ownership, with not enough focus being placed on empowerment initiatives such as skills development and affirmative action.
Harpur said that in any event, Glenrand was looking beyond the Kunene stake. "Even if the Kunenes increase their stake, we're not just looking at their 10% as the end of the empowerment road. We are looking at finding a partner to take our empowerment status up to between 20% and 30% of our business at some stage," he said.
Harpur would not reveal whether any parties had been identified, but the relationship with the Kunene brothers makes them the top contenders.
There is also a sound reason for the Kunenes' delay. In terms of the deal, they could buy the extra 3,1% at a lowest price of 215c a share not much of a bargain, as the shares have dropped to 200c apiece on the JSE Securities Exchange SA.
Harpur said the share price lull was a result of two factors: a downturn in the JSE over recent months and a recent profit warning.
Although the 200c is lower than the conversion price of 215c, it is still higher than the 170c to which the price plunged after the profit warning.
Dudu Kunene, a director of both Glenrand MIB and Kunene Bros Finance, said the trust was only postponing the decision and fully intended taking up the 3,1% at a later date.
"It is probably a setback for Glenrand MIB right now in light of the charter, but with what is happening in the financial sector, even the 10% we intend to hold will not be sufficient for them," he said.
Kunene agreed that the brokerage was looking at an equity ownership figure over the 20% mark.
Kunene Brothers would consider taking the extra stake, should it become available, he said.
"That's one of the options and probably one of the easier ones, considering that we already have an existing relationship," he said.
Harpur said he was comfortable with the Kunene relationship as "they are not just a passive equity partner but are actively involved in all aspects of the Glenrand business".
Jun 20 2003 07:12:00:000AM Rob Rose Business Day 1st Edition
Friday
20 June 2003
