CIARAN RYAN: It was announced this week that SAB Zenzele Kabili will be listed on the JSE on May 28, 2021. This was after approval at a virtual special general meeting held for members of its current broad-based black economic empowerment scheme, SAB Zenzele. What this means is that the current SAB Zenzele scheme is being phased out this month and will be replaced with a new scheme called SAB Zenzele Kabili. SAB company secretary Duncan Pask joins us to discuss this.
Duncan, SAB Zenzele was the country’s biggest broad-based black economic empowerment share scheme in the fast-moving consumer goods sector in South Africa’s history. It generated R9.7 billion in wealth; that’s before it winds down this month. You are now launching SAB Zenzele Kabili on the JSE on May 28. How did this come about and what shares will it own?
DUNCAN PASK: Hi Ciaran. Yes, we are really proud of what SAB Zenzele will deliver when it unwinds at the end of the month; R9.7 billion for over 40 000 shareholder beneficiaries is fantastic value and we really wanted to continue that legacy for our shareholders. It was also a real call from our retailer partners to continue on that journey and that’s why we are now listing SAB as Zenzele Kabili. We think it’s a fantastic part of our business [and] we really believe partnering with our retailers is a kind of key success to our business, and uplifting the communities within which we operate is obviously a key principle of our business operations.
We are also looking to improve on the success of SAB Zenzele by bringing in some price transparency with the listing, and some liquidity from day one for our retailer shareholders and expanding on that base of shareholders to include the qualifying public once we list on May 28.
SAB Zenzele Kabili will list on May 28, and it will hold as its key asset R5.4 billion worth of the world’s largest beer maker, AB InBev, and that’ll give our retailer shareholders and our employees access to the world’s largest beer maker, which we [are] very excited about.
CIARAN RYAN: Okay. So, you’ve just done a special virtual-type AGM for SAB Zenzele shareholders, where you secured a quorum. More than 8 000 shareholders cast their votes and of those, 95% of them voted in favour of the scheme. That satisfies the requirement for the listing. How did you do this in today’s age where large events like this are prohibited?
DUNCAN PASK: Generally, we never battle to get our retailer shareholders to come to our AGM, so over the last 10 years we’ve had to hire out stadiums to bring in our shareholders. Over 4 000 people attend our AGM on an ongoing basis, and they [are] some of the largest AGMs that are held in the world because of the overarching interest of our retailer shareholders. They really truly believe they are partners in our business, and we really truly believe the same thing.
What obviously Covid times brought about for us was a real challenge and something we’ve been working towards over the last year in terms of how we had to adjourn the meeting and come up with a new way of approaching it. We are really thrilled that we did get through our virtual meeting, and we did get the required quorum, and our retailers agreed to continue and reinvest into SAB Zenzele Kabili.
Our shareholding basis is truly broad-based. We have over 29 000 shareholders. The is no large shareholder that creates a quorum for us or gets a certain level of approval like you would normally have at an AGM. It was really a matter of getting out the core message to our retailer shareholders and we did that through a fantastic sales force that we have in SAB, who visited outlets that delivered key information to our retailer shareholders.
We also launched our own app that was available on the Apple iStore or the Google Play store so that people could get more information. We leaned heavily on radio, community radio, and our social media channels to drive that engagement and drive that excitement and we are really, really chuffed in how they came to the party. In all, 8 339 shareholders voted and their overwhelming support – 95% approval on our two resolutions that we put to them – is an overwhelming indication that they want the scheme to go ahead. We’re so very proud we can continue to deliver that value in such tough times for them, and continue [with] that wealth creation for them which is going to be fantastic going forward.
CIARAN RYAN: It might be worth just spelling out what are the key differences between SAB Zenzele and its replacement, SAB Zenzele Kabili. What are the main differences?
DUNCAN PASK: We are moving away from SAB Zenzele, which was a closed scheme. It was available only to our retailer shareholders, our employees, and our community outreach project, the SAB Foundation. It held shares in our local operations in SAB.
So you only really had access to the performance of South African Breweries in South Africa. We’re now moving to a publicly listed scheme that will hold shares in our global beer maker, AB InBev, so we are really excited about what access that creates for our shareholders.
You know, when someone drinks a beer, drinks a Budweiser for example, in New York or a Corona in Mexico City, or a Stella Artois in Brussels, or a Black Label in Johannesburg, our local SAB Zenzele Kabili shareholders will share in that value creation going forward. They will all have access to a global beer maker, a global market maker, and something that we hope will generate and continue to generate value for them going forward.
And then we also open that up to the broader public, which we are truly excited about.
CIARAN RYAN: To recap, SAB Zenzele Kabili will be listed on the broad-based black economic empowerment section of the JSE on May 28. What’s the listing price per share?
DUNCAN PASK: We will list at an initial listing price of R40 per share, understanding that the underlying asset is AB InBev shares – R5.4 billion worth of AB InBev shares. We have issued additional shares to ensure that we can create a listing price that is accessible to the market.
SAB Zenzele Kabili will also have debt funding. It will be geared to 55%, so it will have a preference share it will issue to SAB at very favourable terms – at 70% of prime over a 10-year period. We hope that that R40 listing is accessible to the broader public, and it creates enough room to then grow that value over time as the AB InBev share price appreciates, and that debt is then serviced and reduced.
We hope that we can lure our retailer shareholders in, and our employees and the broader public into staying as long-term shareholders, to stay in for the long term so that we can create real value for them because that is the key message we’re sharing with our existing shareholders and the prospective public that want to buy in. We want you to buy in, we want you to stay with us so that we can create true value for you over a reasonable amount of time.
And at the same time, you get a trickle dividend flow; 25% of dividends declared then gets paid to the participant while the balance goes to reduce that debt and create value going forward.
CIARAN RYAN: Okay. The final and probably the most important question: how and when can people buy shares in SAB Zenzele Kabili?
DUNCAN PASK: We’ve got some fantastic excitement about it. People really want to buy shares. Our call centre is overwhelmed with people wanting to call us. We are asking for some patience. We are listing only at the end of the month. On May 28 we will list. And on May 28 you’ll be able to call us on our call centre, 0861 900 903, we will be able to facilitate those trades for you. That will be through a nominee service that we will facilitate through SAB Zenzele Kabili.
For the broader public that may not necessarily already have access to a trading platform or a JSE broker, they will be able to contact us directly and we will facilitate those trades at a very reasonable cost so that we can encourage people to invest small amounts so that they can grow that value.
If the public already has trading platforms through their bank, or they have access to an existing JSE broker, we would encourage them to access our shares through those platforms.
We will be communicating through our digital channels going forward, through radio, through print media and the various options that will be available, and what sort of documentation will be required to be part of the scheme. But at the moment, we’re setting all that up and we are very excited about when we first list on May 28, 2021.
CIARAN RYAN: All right. So just to be clear on that, the general public shouldn’t try and buy any shares before May 28. They can only do it after May 28.
DUNCAN PASK: Unfortunately there’s nothing to buy as yet. We’re not listed. They won’t find us anywhere on the JSE. We will ideally be blowing the Kudu horn on the morning of the 28th, and SAB Zenzele Kabili will go live and people will be able to then access those shares for trading purposes.
CIARAN RYAN: Do you want to give us the call centre number just one more time?
DUNCAN PASK: It’s 0861 900 903.
CIARAN RYAN: Thanks very much. That was SAB company secretary Duncan Pask.
Brought to you by South African Breweries (SAB).