One of the problems with BEE is that it seems to enrich the same group of people. These few people who were lucky enough to be connected when the first round of deals were done have been able to build brands, build their own balance sheets and with that have come more opportunities. Partly because for many ‘white’ companies part of the BEE ownership issue is who to sell the shares too, and the select few are often the only known counterparties.
We believe that for BEE to work, for real transformation to take place, that it must be broad-based. The more South Africans who benefit the better.
With that in mind we have set up the Ebony Network.
The core ideas are simple:
- Tusker is a private-equity solution
- Under the BEE ownership rules, a BEE private equity fund must invest 50% of its fund in deals that are already 25% BEE (“direct black owned”) or facilitate this at the time of the deal.
- Many of the companies we meet do not have direct black ownership, so where they are looking for a 51% deal then we do it as follows:
- 26% to the Tusker Private Equity Fund (which counts as flow through BEE due to our fund manager – Musth Capital – being 51% black)
- 25% to Tusker Ebony – which is owned by The Tusker Trust (a bewind trust) whose beneficiaries are the members of the Ebony Network.
- The deal is funded via our usual share-swap mechanism, with the selling shareholders receiving full payment.
- The Trust is loaned this money by Tusker and it pays it back (via dividends) over a 10 year period for each deal, strictly following the “time-based graduation factor” of the BEE Act. This keeps the net value calculation exactly in accordance with the BEE Act.
- The beneficiaries of The Tusker Trust (the Ebony Network members) never have to pay a cent for these shares, as we do the financing.
That’s right – this is free money (in the form of shares) for any black South African who registers.
Our intention with the Ebony Network is that any black South African can join for free, and get free shares in our portfolio. These will take 10 years to be paid off, but they come at no risk. If our ambitions and hard work pay off then Ebony Network members will share in R10,000,000,000. That’s ten BILLION rand. It may be less than that, it may be more.
Tusker Ebony will share in the marketing, deal-flow, due-diligence, legal side (i.e. all the work done by the Tusker private-equity fund), so it’s incredibly low cost and efficient.
The shares each person gets will depend on their points. The points system allocated points based on how active each person is in the network – how many friends they invite, how they share content, participate in community discussions etc. Members may also be invited to invest into the fund or to invest directly into the portfolio companies themselves. Many opportunities will come down the line, including listing Tusker Ebony on the empowerment board, so these shares will be tradable on the open (empowerment board) market.
You can sign up here. The shares are really free. This is entirely legit. We hope it makes a real difference to our beautiful country and its people.