Investing in the SAB Zenzele Kabili B-BBEE Share Scheme: Review 2022

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.

Details of the SAB Zenzele Kabili Deal explained

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. 

How do I buy the SAB Zenzele Kabili Shares?

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 a JSE 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. 

Buying SAB Zenzele Kabili Shares on Computershare.

If you want to acquire Zenzele Kabili Shares straight from Computershare, you must first register a “easy account” on the platform if you don’t have one already. Maintaining an easy account with Computershare has no monthly fees; you just pay the trading costs when you buy and sell shares. You must then download and sign the custody and settlement agreement after creating an account.

You must also complete and sign a Naturalization affidavit in the presence of an oaths commissioner. After completing these forms, submit them to SABKabili@computershare.co.za together with certified copies of your ID document, proof of residency, bank statement, and an income tax document specifying your income tax number. Please keep in mind that all of your supporting documents should be no more than a year old, with the exception of your proof of residence, which should be no more than three months old.

Your account will be BEE validated after your application has been approved. After that, you can fill your Dealing Trust account, and then contact a Computershare agent to give the order to buy your Zenzele Kabili shares via the process outlined here. You can manage your investment portfolio online through the investor centre portal after you’ve successfully purchased your shares.

How to buy Zenzele Kabili shares on EasyEquities.

EasyEquities has recently announced that Zenzele Kabili shares would be available on their trading platform. Easy equities is a popular low-cost online trading platform in South Africa, where you may buy stocks, exchange-traded funds (ETFs), exchange-traded notes (ETNs), and other baskets and bundles. To buy shares on EasyEquities, you must first create an account as a client.

On EasyEquities, the method for purchasing Zenzele Kabili shares differs from that of other BEE share alternatives. Individual investors must fill out and execute a Naturalisation Affidavit at a certified Commissioner of Oaths’ office, just as they did with Computershare. Investors should also supply certified copies of their identification documents. EasyEquities also provides instructions on how qualified micro and small businesses can purchase Zenzele Kabili stock. The EME-Gen-Affidavit shall be signed by an authorised representative of a B-BBEE Exempted Micro Enterprise with a prior trading period annual revenue of R10 million or less (also in the presence of a certified Commissioner of Oaths).

The approved representative of B-BBEE Qualifying Small Enterprises having an annual turnover of between R10 million and R50 million from the preceding trading period shall sign the QSE-Gen-Affidavit. A new Easy ZAR BEE account will be activated once the documents have been reviewed and authorized. After that, you can buy and sell SAB Zenzele shares in the same way that you would any other stock listed on the EasyEquities platform.

Closing remarks

Zenzele Kabili shares are the latest share scheme to be listed on the JSE empowerment board, giving previously disadvantaged South Africans the chance to buy a stake in SAB and participate in its growth as part of the transformative agenda of B-BBEE ownership programs. The thoughts and opinions presented in this article, however, are not intended to be financial advice. The information provided is solely for the purpose of education and awareness, with the goal of making individuals aware of potential investment opportunities. Before making any financial decisions, please consult with an FSCA-registered financial advisor.