Bulelani Ngcuka enters the property industry
With the wheels of transformation turning in sectors such as mining, financial services, and lately agriculture, the property industry has been one of the sectors lagging behind.
But today the property transformation wheels were set in motion. First National Bank HomeLoans and the PA Group one of the countrys leading property companies announced a R50-m black economic empowerment (BEE) initiative within the real estate industry. The deal will see black estate agents, employees of the PA Group and blacks in general owning 26% of the group.
According to Jan le Roux, CEO of PA Group, the significance of the deal is that there has not been any empowerment in the real estate industry. So with this deal we are essentially breaking new ground and setting an example for other companies to follow, says Le Roux. He adds that the deal is a milestone in an industry renowned for slow transformation and empowerment.
Le Roux says white estate agencies have neglected the potential of townships and black estate agents. With the exception of a few agents of colour successfully servicing clients in white areas, empowerment in the industry, particularly in the mortgage origination sector, is still sorely lacking.
The group also announced the appointment of Bulelani Ngcuka to its board as a non-executive director. Ngcuka praised the PA Groups genuine, broad-based empowerment achievements; Le Roux, in turn, praised Ngcukas caliber and experience.
We believe he will make a valuable contribution to our business generally as well as to the long-term success of our BEE initiative, says Le Roux, adding that Ngcuka is a man of integrity who is not afraid to speak his mind.
FNB will finance the acquisition of a 26% interest in the group by the newly created New Deal Trust an empowerment vehicle aimed at ensuring empowerment within the real estate industry.
The Trust with Le Roux; PAs financial director Jas Naidu; Bulelani Ngcuka, chairman of Amabubesi Investments and former head of the National Prosecuting Authority; and Hlubi Mazwai as trustees - will from January dispose of its 26% interest to its intended recipients.
There will be three tiers of ownership. Le Roux explains that the first tier will entail the offering of 5% of the groups shares (10-m worth about R10 per share) to 1 000 black estate agents who have sold at least two properties during the preceding six months. The shares will be warehoused by the trust, paid for by dividends and transferred to the owners upon full payment.
The second tier will be aimed at broadening the empowerment base even further, says Le Roux, allowing any historically disadvantaged individual to buy up to 2,5% of the groups shares at a discount to actual market value.
And the third tier will enable historically disadvantaged employees of the PA Group to obtain shares at a significant discount to market value, says Le Roux. We will make all these shares available at a significant discount to their market value. The broad based nature of the deal will ensure that there will be real wealth creation for black estate agents in the industry, he adds.
FNB HomeLoans CEO, Ed Grondel, says FNB is delighted to be part of this groundbreaking initiative. For some years now, we have watched expectantly for the emergence of a serious BEE participant in the real estate field. For it to arrive with the support and active involvement of the PA Group bodes well for its long term growth and sustainability.
The PA Group has substantial property-related interests that include 100% ownership of PA BetterBond; significant interests in The Saturday Star Property Guide, the PA Homefinder in Pretoria and the East Cape Property Guide; 100% owernership of estate agent loan company PA Advances; and 100% ownership of The Property Professional Online Newsletter.
Article by: Chris Nthite - www.moneyweb.co.za