- Absa Group has announced a new broad-based black economic empowerment (B-BBEE) transaction, valued at approximately R11.2 billion, aimed at strengthening its B-BBEE credentials and providing benefits to communities and staff.
- The transaction will allocate 7% of the total Group shareholding to structures that will benefit ordinary black South Africans through a Corporate Social Investment (CSI) trust and employees through a staff trust, with black ownership expected to exceed the 25% threshold outlined in the Financial Sector Charter.
- The 4% perpetual CSI trust will focus on education and youth employability support for black South African beneficiaries, while staff employed in South Africa will participate in the 3% component of the transaction, with black staff receiving an additional 20% allocation.
Absa Group, one of South Africa’s leading banking institutions, has announced the details of a new broad-based black economic empowerment (B-BBEE) transaction, which will be implemented later this year following shareholder approval. The transaction, valued at approximately R11.2 billion, aims to strengthen Absa’s B-BBEE credentials and provide communities and staff with the opportunity to benefit from the value generated by the Group.
According to the press statement, the transaction will allocate 7% of the total Group shareholding to structures that will benefit ordinary black South Africans through a Corporate Social Investment (CSI) trust, and employees through a staff trust. This move is set to be one of the largest B-BBEE transactions in recent times, with black ownership of Absa Group expected to exceed the 25% threshold outlined in the Financial Sector Charter.
Arrie Rautenbach, Absa Group CEO, emphasised the company’s commitment to being an active force for good and fostering a diverse and inclusive organisation. “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.”
As part of the transaction, a CSI trust will indirectly own a 4% shareholding, benefiting black communities, while a staff trust will indirectly hold 3% of Absa Group. Black staff members in South Africa will receive over 82% of the value of the staff trust. Additionally, approximately 1% of Absa Group shareholding will be made available to staff employed by subsidiaries in other markets.
Rautenbach highlighted the importance of empowering communities through education and youth employability initiatives, and creating opportunities for all people to prosper. He added, “We believe that staff will also be incentivised in a way that promotes engagement and our espoused culture objectives.”
Shareholders will vote on the transaction at a general meeting on 2 June 2023, following the publication of a transaction circular in May.
The 4% perpetual CSI trust will be focused on education and youth employability support for black South African beneficiaries, receiving an annual dividend equal to 25% of the dividend per share paid by Absa Group. Staff employed in South Africa will participate in the 3% component of the transaction, with all eligible employees receiving the same share allocation, irrespective of race, background or seniority. Black staff will receive an additional 20% allocation, with the shares vesting after a five-year period. Staff employed by Absa subsidiaries in other countries will participate in a similar cash-based award programme, with the value equating to approximately 1% of Absa Group’s market capitalisation.
