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Qualifying Black South Africans — including lower-income earners and Old Mutual employees — will now be able to buy the insurance giant’s shares at relatively low prices through its newest black empowerment-focused ownership scheme, Bula Tsela “pave the way” in Sesotho.
Old Mutual shareholders approved the broad-based black economic empowerment (B-BBEE) ownership scheme on Friday, 12 August. It claims to be the first insurer in the country “to facilitate an offer of shares directly to the Black South African public, including lower income earners”.
The scheme, which is scheduled to be fully implemented by the end of December, allows qualifying applicants to buy a minimum of 200 retail scheme shares at a total upfront subscription cost of R2 000.
Applicants who cannot afford the above upfront subscription will be given the opportunity to apply for a maximum of 100 retail scheme shares for a total subscription price of R1 000; this entails an upfront R100 payment, with the rest split over 12 months.
According to the insurer, 10 percent of the retail part of the scheme is set aside for these applicants. However, Old Mutual says that applicants cannot choose the scheme they want to subscribe to. Instead, the insurer will apply its discretion to match applicants with schemes they qualify for.
The Old Mutual Bula Tsela Retail Scheme will open on August 22, with applications closing on October 24, 2022. According to the group, the new scheme will help it meet its target of achieving at least 30 percent black ownership.
“This deal underpins our firm belief that real transformation is necessary to sustain business growth and serve the best interests of all South Africans,” CEO Iain Williamson said in a statement.
“Through this Old Mutual Bula Tsela Retail Scheme, we will give our people the opportunity to become (indirect) owners of the company they love and trust,” adds Williamson.
Old Mutual’s share price closed just over 2 percent down on Monday, at R11,52 a share.
At this market price, 200 shares would cost approximately R2 304 — thus buying retail scheme shares through the Bula Tsela empowerment structure will offer participants a discount of at least R1,52 a share.
The insurer says another motivation for the establishment of the scheme is to support a culture of investment and savings among consumers despite their waning spending power.
“The reality is that consumers are stretched, but many are looking for ways to save or invest for the medium- to-long-term,” says Williamson.
“It’s very important for South Africans to understand that they can invest small amounts consistently to create savings for themselves — one does not need hundreds of thousands of rands to start your savings journey,” he adds.
Earlier this month the B-BBEE Commission’s National Status and Trends on B-BBEE Transformation Report for 2021 revealed that black ownership levels across all entities dropped to below 30 percent in 2021 to 29,5 percent, down from 31 percent in 2020.
At 12,4 percent, the ownership levels for black women in the county according to the report were even more worrying (down 2,6 percent from 2020).
“Transformation is a key component of our strategy and journey as a trusted partner in Africa. We want to keep playing a significant role in driving growth and transformation broadly,” Williamson says.
“Now we’re inviting our key stakeholders to join us as we work to ‘open the way’ and make a real, sustainable difference to their lives and livelihoods through this share scheme.” — Bloomberg.
Online Reporter