Absa To Implement Landmark B-BBEE Transaction
Absa To Implement Landmark B-BBEE Transaction. Absa Group has finalised the details of a new broad-based black economic empowerment (B-BBEE) transaction, to be implemented later this year, subject to shareholder approval. The transaction will strengthen Absa’s B-BBEE credentials in South Africa, while also providing communities as well as all staff with an opportunity to benefit from the value generated by the Group.
The transaction will increase black ownership through a transaction that will see 7% of the total Group shareholding allocated to structures that will benefit ordinary black South Africans through a Corporate Social Investment (CSI) trust, and employees through a staff trust. Seven percent of Absa Group equates to approximately R11.2 billion based on recent prices, making the transaction one of the largest B-BBEE transactions in recent times. After the transaction, black ownership of Absa Group is expected to exceed the 25% threshold set out in the Financial Sector Charter.
“The transaction was specifically designed to align with our intent of being an active force for good, firmly demonstrating our commitment to broad-based black economic empowerment as we build a diverse and inclusive organisation not only in South Africa, but also more broadly across our business,” said Arrie Rautenbach, Absa Group CEO. “The transaction is the next big step in our broader transformation journey and, at the same time, recognises the role that our staff and communities play by giving them the opportunity to benefit from the value generated by the Group.”
Ratenbach continued to say, “A CSI trust, benefiting black communities, will indirectly own a 4% shareholding, while a staff trust will indirectly hold 3% of Absa Group, collectively constituting the 7% Absa Group shareholding in the transaction. Black staff members in South Africa will receive just over 82% of the value of the staff trust.” A further equivalent of approximately 1% of Absa Group shareholding will be made available to staff employed by subsidiaries in other markets. “Although primarily designed to achieve our black economic empowerment and transformation objectives, it was also important for us to ensure that a portion of the benefit will be used to empower communities through education and youth employability initiatives,” said Rautenbach. “A key principle underpinning the transaction was Absa’s support for a just society that creates opportunities for all people to prosper.”
“The transaction signals another substantial milestone in our ongoing efforts to play our role in society and it enables us to scale our efforts to empower communities,” said Rautenbach. “We believe that staff will also be incentivised in a way that promotes engagement and our espoused culture objectives. The transaction is a proof-point of Absa’s commitment to becoming a purpose-led organisation, empowering Africa’s tomorrow, together… one story at a time.”
