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.
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.
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.
“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.