DealMakers - Q3 2021 (November 2021)
The Imperial empowerment partnership: Highlighting the potential of B-BBEE transactions
by Zaid Moola
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Since the enactment of B-BBEE (BEE) legislation in 2003, we have seen a marked shift from corporates in striving to truly transform the economy and deliver value for the broader society.
A recent BEE deal that Standard Bank facilitated with JSE-listed Imperial Logistics (Imperial) illustrates this shift well. The strategic driver of the deal was that it be linked to the Group’s broader strategy and strengthen Imperial’s South African operations, enhancing its business focus as a ‘Gateway to Africa’. The BEE transaction undertaken is synergistic and value additive for all parties – Imperial, its shareholders, and its strategic BEE partners – while delivering on not just the regulatory requirements, but the intended spirit of BEE.
Zaid Moola
Imperial is an African focused provider of integrated market access and logistics solutions. The Group’s purpose is to connect Africa and the world, and to improve people’s lives through enhanced access to quality products and services, which is evidenced by their commitment to sustainable empowerment.
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Imperial’s commitment to sustainable empowerment and transformation was the touchstone in choosing to partner with Afropulse and Willowton Group, partners who support not only the strategic objective of making Imperial more competitive locally, but also contributing to their broader 'Gateway to Africa' strategy. Successful transactions, not just BEE transactions, have always emanated from the bedrock of strategically aligned partnerships, allowing for significant value creation for all stakeholders.
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Sustainable and shared value creation is achieved through active participation and contributions that strengthen and enable the growth of the company, with a knock-on benefit of growing the economy – which is the real driver. It is also achieved through genuine partnerships with shared visions and objectives amongst all partners, a factor all too often overlooked.
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When it comes to deals, it’s easy to become fixated on the financial aspects, but this can distract from the all-important human elements that underpin transactions. These range from the relationships built, and trust painstakingly earned before anyone signs on the dotted line, to the new jobs and business opportunities created when the transaction begins to bear fruit. Scratch the surface of any acquisition and you’ll discover an intricate web of prior connections and smaller deals that opened the doors to the smiles and handshakes making headlines.
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Although the Imperial deal was filled with many intricate details, the long and the short of it is that it culminated in three entities – Willowton Group, Afropulse and Converting Trade – taking a 25% stake in Imperial Logistics Group SA, which houses most of the Group's operations in the country. Each of the entities will be represented on the Board of Imperial Logistics South Africa and will be intimately involved in defining and driving the strategic growth of the business.
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BEE deals are not all the same, and each transaction has its own complexities and nuances. For example, while discussions on the transaction had commenced in early 2019, no one could have foreseen the oncoming COVID-19 pandemic and its impact on economies and life. The conclusion of the transaction is testament to the unwavering commitment and effort from each of the partners to work through these unforeseen and unparalleled circumstances and conclude a transaction that was aligned to each parties’ objectives.
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Successful BEE deals are about so much more than a regulatory compliance exercise. It’s about intimately under-standing the ambitions and pain points of the parties involved. It’s about forging strategic relationships, backing the right people and integrating the complexities of the regulatory environment with the strategic imperatives of all parties to create true value.
This doesn’t happen overnight; it takes years to cultivate. However, it all pays off when you are able to unite people in an alliance that not only benefits the entities they represent, but the wider community, the country and the African continent, as is the case with the Imperial empowerment partnership.
Moola is Head: Wholesale Clients, South Africa | Standard Bank Group.