On the 28th of May 2021, the SAB Zenzele Kabili B-BBEE Share Scheme listed on the Johannesburg Stock Exchange BEE Board. The listing presents an opportunity for interested qualifying investors to participate in the second iteration of the hugely successful B-BBEE Share Scheme.
SAB Zenzele launched in 2010, and the scheme reached maturity in May 2021. The historic SAB Zenzele scheme attempted to provide equitable ownership to SAB employees and retail partners like tavern owners and bottle store owners.
The SAB Zenzele initiative became the largest B-BBEE share scheme in the fast-moving consumer goods (FMCG) sector in South African history, with a total maturity value of R9.7 billion. When the scheme concluded in May 2021, retail shareholders who invested R100 in 2010 could expect to receive a total pre-tax dividend of R77 518.
SAB relaunched this initiative with the SAB Zenzele Kabili scheme, which will own R5.4 billion in AB InBev shares. In addition, the new employee share ownership structure expands ownership to other B-BBEE investors from the general public, as well as qualifying SAB employees. Furthermore, existing SAB Zenzele retailer shareholders can also reinvest a percentage of their residual earnings in the new scheme.
The underlying assets in the share scheme is a holding of AB InBev shares, the company that owns SAB.
AB InBev is the world’s largest beer producer boasting more than 500 top beer brands from all over the world. Some popular brands include Castle, Budweiser, Carling Black Label, Flying Fish and Corona, these are among the most valuable beer brands globally.
The Zenzele Kabili deal is structured with a vendor-funded 55 per cent gearing arrangement. The interest rate on the debt funding the deal is 70 percent of the prime lending rate (currently at 7 per cent).
The loan funding enables investors to buy the shares at a discounted price. The shares were initially listed for R40 per share for shares normally trading at around R1000 per share. Through this agreement, SAB Kabili will provide 50c in free shares for every R1 invested.
A proportion of the dividends will be used to pay off the cost of the debt funding the deal, whereas the dividend payout will be 25 percent per year. Finally, and crucially, because of the debt deal, it should be known that a single Zenzele Kabili share does not equal one AB InBev share.
Unlike the previous share scheme, the Zenzele Kabili Shares can now be traded on the JSE. However, SAB employees will not be able to sell their holdings for at least five years.
There are two options available for investors to buy the shares. Investors can either buy the shares from aJSE registered broker or trading platform. Several banks like FNB and Investec are offering these shares on their share trading platforms. Alternatively, investors can buy the shares without involving a broker directly at Computershare.com.
To buy the Zenzele Kabili Shares directly from Computershare, you first need to create an “easy account” on the platform, if you do not already have one. There are no monthly fees to maintain an easy account with Computershare; you only pay just the trading costs whenever you buy and sell shares.
After creating an account, you must then download and sign the custody and settlement agreement. In addition, you must also download and sign a Naturalisation affidavit in the presence of a commissioner of oaths.
After filling out these documents, you must then email them together with certified copies of your ID document; proof of residency; bank statement; and an income tax document stating your income tax number to SABKabili@computershare.co.za. Please note that your supporting documents should not be older than a year, except for your proof of residence which should be less than three months.
Once your application has been processed, your account will then be BEE verified. Thereafter, you can then fund your Dealing Trust account, after which you can now contact a Computershare agent to give the instruction to buy your Zenzele Kabili shares as per the process to buy shares described here. After successfully buying your shares, you can manage your investment portfolio online through the investor centre portal.
EasyEquities also announced that they are offering Zenzele Kabili shares on their trading platform. Easy equities is a South African fan favourite easy to use low-cost online trading platform where you can buy stocks, exchange-traded funds (ETFs), and exchange-traded notes (ETNs), as well as other baskets and bundles.
To buy shares on EasyEquities, you first need to register as a client on the platform. As with other BEE share options, the process to buy Zenzele Kabili shares is a little different on the EasyEquities.
As with Computershare, interested individual investors are required to submit a Naturalisation Affidavit filled and signed at a certified Commissioner of Oaths’ office. In addition, investors should also send valid certified copies of identity documents.
EasyEquities also gives guidelines on how qualifying micro and small enterprises can buy Zenzele Kabili shares. An authorised representative for a B-BBEE Exempted Micro Enterprise with an annual turnover of R10 million or less from the previous trading period should sign the EME-Gen-Affidavit (also in the presence of a certified Commissioner of Oaths).
For B-BBEE Qualifying Small Enterprises with an annual turnover of between R10 million and R50 million from the previous trading period, the authorised representative should sign the QSE-Gen-Affidavit. Oncethe documents have been verified and approved, a new Easy ZAR BEE account will activate. After that, you can go ahead and buy the SAB Zenzele shares in much the same way you can buy and sell any other shares listed on the EasyEquities platform.
As the latest share scheme to list on the JSE empowerment board, Zenzele Kabili shares presents previously disadvantaged South Africans the opportunity to purchase a stake in SAB and participate in the company’s growth as part of the transformative agenda of B-BBEE ownership initiatives .
However, the views and opinions expressed in this article do not constitute financial advice. The information presented is only for education and awareness purposes, intending to make people aware of investment opportunities that may be available to them. Please enquire with an FSCA registered financial advisor before making any financial decision.