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Balwin’s BEE deal gets green light at AGM

South Africa’s largest sectional-title residential developer says the transaction will bolster the group’s black empowerment credentials.
Steve Brookes, founder and CEO of JSE-listed Balwin Properties, right, with Aobakwe Reginald Kukama at the signing of the empowerment deal in Bedfordview on Wednesday, 26 May, 2021. Image: Supplied

Despite some opposition from minority shareholders to the Black Economic Empowerment (BEE) deal at JSE-listed Balwin Properties, the group announced on Monday that it has secured approval from shareholders to implement the deal led by Aobakwe Reginald Koketso Kukama.

The green light does not really come as a surprise as Balwin founder and CEO Steve Brookes is still a majority shareholder in the group through Volker Holdings, in which Brookes and his family are the sole beneficial holders.

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Brookes has been backing the deal from the start, as part of a concerted move to bolster Balwin’s BEE credentials as it eyes even bigger residential developments such as Mooikloof Mega City in Pretoria.

Read:
Balwin Properties announces BEE deal
Fund manager appeals to Balwin shareholders to vote against proposed BEE deal

The approval of the deal follows Balwin’s AGM on Monday morning.

“I’ve been working on a suitable empowerment transaction since listing and Balwin is delighted with the shareholder support received to implement the transaction. Transformation has always been very close to Balwin,” Brookes said in a statement.

In terms of the transaction, a special purpose vehicle owned by black shareholders (BEE SPV) will subscribe for 47 219 260 newly issued Balwin shares. The total subscription price will be 455 cents less a 20% discount.

“In addition to the phenomenal work done by the Balwin Foundation, the operational side of Balwin has made considerable efforts in transforming our business over the past number of years in support of the principles and objectives of the Black Economic Empowerment Act. This transaction will further improve our BEE scorecard rating,” Brookes reiterated.

Kukama will hold 51% of the shares in the BEE SPV, giving him majority control of the BEE company. Balwin says a black female will hold 24% and black youth will hold the remaining 25% of the BEE SPV.

Read:
Mooikloof opposition is not about entitlement – Saibpp president
Infrastructure a key part of economic recovery plan – Ramaphosa

“The BEE SPV owners will pay R20 million of their own capital towards purchasing the newly issued shares, with the balance to be repaid from the proceeds of dividends and own contribution cash top-ups over the next ten years,” Balwin points out.

“There is also a lock-in clause of 10 years during which the shareholding may not be disposed of or encumbered,” it adds.

Balwin is South Africa’s largest sectional-title residential developer with major projects in several provinces, such as The Blyde, Polofields and Munyaka in Gauteng; The Huntsman in the Cape; and, Izinga Eco Estate in KwaZulu-Natal.

Kukama is the founder of Yaetsho Investments & Projects, a project management and property asset management group that is also involved in renewable energy. He is behind the Vaal River City Development in Gauteng and has worked with the Mia family – the landowners of the Waterfall mega development precinct – among other business interests.

“Balwin believes that Kukama will be a value adding partner who possesses the functional and technical expertise to complement the existing board’s skillset,” the group said in its statement, pointing out his “vast experience in the property sector with specific focus on project management”.

Following the initial signing of Balwin’s BEE deal in May, Kukama told Moneyweb that he is looking forward to partnering with the group and opening new markets and avenues of growth.

“This is more than a BEE deal. We’ve worked together ever since Balwin’s first residential development in Waterfall started some five years ago. We are just taking our mutually beneficial business relationship to another level,” he said at the time.

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COMMENTS   21

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Just so lekka to get a freebee because of your race ne !!

Ja, like your parents did. Pity they left you with the bill.

Yeah like apartheid

Skipped the article and scrolled down to the comments, only to find none… lol

Here is the comment you were looking for.

“I cannot possibly understand how fraternity can be legally enforced without liberty being legally destroyed…” – Frederic Bastiat.

Brilliant Sensei but I think the Zulu version will present a different interpretation.

Soooo glad I got out of this at R4.35.

I’m not a fan of funding people based on their race.

Mr Big Money here with his PE teacher salary life savings in a limited pnp bank account.

Bwahahaha!

You can’t help yourself, can you Bib/Bibby/Aonk?

Your life is meaningless.

Let the piggy backs from Mr Mlungu continue. Its what made our president great.

And how does this create value for your shareholders and employees?

All you have done is pass value on to a valueless vehicle. Bet the BEE deal is a loan from the company to the new shareholder who gets to pay off his shares with future earnings

Its no wonder our economy is shrinking it quite literally is a zero sum game

To the author or Balwin,

The last time we had an article on Balwin I asked that it be explained how this is good for shareholders (as has ewc above) and it never has been explained. Until this is explained technically we have to assume that this is an “emperor’s got no clothes” scenario.

Maybe you need the credentials to buy government land or get approvals or access to tenders but this is NOT explained here. For instance I fully understand why listed Construction or IT companies do this as they NEED the credentials to obtain lucrative contracts for the Govt and is obviously good and profitable for them and via extension good for shareholders. As it is not explained it seems that Balwin’s shares are being diluted for a small down payment with rest coming out of the profit and cash flow of existing shareholders. PLEASE TELL ME HOW THIS IS GOOD FOR EXISTING SHAREHOLDERS.

BEE is like a law that forces an average suburban family to share one room of their three-bedroom house with previously disadvantaged people so the municipality can provide this household with services.

The BEE family will actually buy this room from you, with money you lend them, with the room as security. This is tantamount to a charitable donation on your side. You also pay the rates and taxes on their behalf. If property values rise to a level where you make a profit on the house, the BEE family will own their room and they can sell their room to a white family. Your problems have only started.

Since you don’t have a BEE family in your house now, the municipality will stop taking your sewage and they will cut off your water and lights. You will be forced to put another BEE family in a third of your 2 bedroom house now before the municipality comes and evicts you from your house that actually belonged to the municipality all along. You see, you pay the bond, the rates and taxes, the insurance, the gardener, and the painter, but in effect, the house actually belonged to the municipality all along. This is socialism and it is good for you.

It does not make sense because it does not make sense.

Sorry you did not get the answer to which you felt entitled to.

It is not ‘good’ for shareholders. It is you having to pay the never ending bill that your parents left you. How are you still struggling with this concept?

BFN big time and Sensei, Thanks for the humorous replies but I am not wanting answers to the BEE system itself, I want Balwin to tell us the exact reason they are doing this so we can either be in or out. All we getting is spin such as what a great partner he is and mutually beneficial, excited……..blah blah blah. It seems to me that Balwin’s clients are individuals buying three up “townhouses” that do not request a BBBEE Certificate, so why do they need this exactly, like above is it to get approvals, govt land…..what is it. Maybe I have missed something here.

Went to check who this BEE partner is and their track record and I wasn’t disappointed at all. All the project work they’ve done, guess who is the client – GOVERNMENT.

Now I wonder what Steve is trying to achieve, maybe to get his hands in a government purse – there’s no free lunch here. Nothing for mahala

I was with Reggie at UCT. Bright chap, consummate professional. Have come across him in industry over the years – he’s no Tokyo. He will add value to Balwin – I’ve no doubt.

Fair enough, and I believe you, but if he is a professional, why does he need a law that gives him a handicap like in the game of golf then?

I know 100’s of bright, decent and capable people from varsity – they don’t get these invites because they’re white. Believe this used to be called Apartheid

Brilliant! I was with him at UCT too yet my impression was that his political connections far outweighed any property knowledge. I do recall him parking at Jamie Stairs with his Porsche Cayenne (second car) that was left at the airport. Presumably you also went aboard his yacht at the waterfront? Not a bad guy, just bleeding obvious the man is politically connected. How enriching an already cash flush politically connected individual progresses the plight of Africans is beyond me. But hey, I’m probably just WMC

Don’t touch this toxic nonsense with a bargepole.

End of comments.

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