At Tusker, as you’ve probably guessed, we like elephants.
So we’ve given our BEE ownership solutions elephant-related names:
- The first is ‘Addo’. It’s named after the Addo Nature Reserve in the Eastern Cape. A reserve famous for its Elephants.
- Our latest product is ‘Tembe’, named after Tembe Elephant park in KZN.
This post explores how Addo and Tembe are similar, and how they differ.
How they differ:
- Addo is simpler and ideal for smaller, low-value or asset-light companies where the shareholders are prepared to invest in 25%+ BEE-owned companies in ‘exchange’ for their BEE ownership. This investment can be strategic (i.e. into an adjacent business that will help your business grow), and is a great opportunity to set your staff up in a related business where you have every incentive to make it work. It’s a great model for you and for empowerment, and for asset light or low value businesses (any service business) it’s a very affordable option.
- Tembe, although a bit more complex, is better for high-value, asset-heavy businesses. It’s also better for those with complex Cap tables and those that are growing fast enough to warrant raising debt or equity capital. It can even work for other funds looking to invest into ‘white’ companies. The tradeoff is that it does require indirect ownership by black people in your business (about 6.5% in total, but less if you grow fast). The people here can be your staff, or strategic partners, and you can sell their shares to them over time. It’s a great approach for big companies looking to achieve legitimate BEE in a sustainable way.
How they are similar:
- Both fall under the private-equity rules of B-BBEE ownership. i.e. they are deemed ownership structures.
- They’re both entirely legitimate ways to achieve BEE ownership.
- Both make use of private-equity funds managed by us (Musth Capital is a licensed private equity fund manager and 51% black-female owned. FSP 49558).
- Both leave you in effective day to day operational control of your business.
- Both can work with any existing structures you have in place.
- Both give you an easy path to achieve 51% or even 100% black-female ownership.
- Both are easy for your accountant to understand. You’ll know exactly what investments/costs/cash-flows are required, in advance. There is no uncertainty.
- Both leave all your future options open.
- Both are straightforward decisions to make.
If you’re looking for all the advantages that BEE ownership can give you, please contact us. We’ll explore which approach, either Addo or Tembe makes the most sense for you.