Bravura Corporate Finance (“Bravura”) was mandated in 2016 by the Wendel Group, a listed French investment firm with more than 300 years of track record and a multi-billion Euro net asset value, to advise on a Broad-Based Black Ownership (“B-BBEE”) transaction structure for their acquisition of the Tsebo Solutions Group from Rockwood Private Equity. Capital Group, a leading global asset management and private equity firm managing more than a trillion US Dollars, co-invested alongside Wendel.
Tsebo Solutions Group is a pan-African contract facilities service provider, with services spanning facilities management, cleaning, catering, security etc. The total enterprise value of the acquisition was R5.25bn, making this one of the largest private equity deals of the year in South Africa.
Tsebo has a long history as a leading empowerment employer in South Africa. They were the first corporate in SA to implement Affirmative Action in 1981, and the first in their industry to achieve both Level 2 and Level 1 on the new 2015 DTI Codes. Furthermore, B-BBEE credentials are critical to the commerciality of the South African business, and the maintenance of Level 1 post-acquisition was a social, cultural and commercial imperative. The cross-border nature of the transaction and related complexities, together with the sheer scale of the asset resulted in very specific structuring being required.
The final structure combined a 26% stake held by a B-BBEE grassroots Trust, supporting several women’s broad-based initiatives that were also beneficiaries of the previous Tsebo B-BBEE ownership structure, with an investment by WDB Investment Holdings (Pty) Ltd (“WDBIH”) (25% effective stake in the South African business), a respected and successful broad-based, women-owned and managed investment holding company that has distributed more than R200m over two decades to its WDB Trust. The WDBIH investment was supported by a funding package provided by the Standard Bank of South Africa.
Bravura worked closely with South African legal and tax advisors to structure the transaction in a short timeframe to meet phased timetable deadlines as well as all regulatory requirements. Bravura played an integral role in structuring the B-BBEE Trust, as well as in running a full investment process which, inter alia, introduced WDBIH as the empowerment partner. Bravura was also instrumental in the structuring of the financing package, enabling WDBIH to secure a competitive and attractive package.
Bravura is proud to have advised on one of the largest private equity deals ever in South Africa that required minimum 51% Black Ownership. This ensures that the deep beneficiation that has become a hallmark of Tsebo’s role in SA society is set to continue. We consider this to be a landmark transaction, particularly in terms of local investors successfully investing alongside sophisticated international groups.
Categories: B-BBEE, Corporate Finance, News, Transactions
Published: 16 November 2017