Empowering employees

2008-07-30 00:00

A former Pietermaritzburg man is at the centre of a remarkable Broad-based Black Economic Empowerment (BBBEE) initiative that is set to secure the financial future of about 2 000 participating fuel-pump attendants, cleaners, admin staff, cashiers and forecourt supervisors across South Africa.

It is probably fair to assume that for most previously disadvantaged South Africans, investing is a complex and costly option that they would not normally consider viable.

Ordinarily these filling station workers, who now will not have to fund their share out of their pockets, would not have the opportunity or means to invest in a listed company.

However, through the creation of Black Economic Empowerment (BEE) investment company Abrina 5604 Limited, Vijay Ramluckan (who is the CEO) and his partners will help these workers benefit from the much vaunted Sasol BBBEE deal.

In order to get a sense of the scale of this deal, it is worth noting that Abrina was allocated the largest portion of Sasol’s sale to selected BEE groups, with more than 25% of the sale going to the company.

Abrina’s allocation of Sasol shares has now grown with the appreciation of the share price from R820 million to over R1 billion.

The deal gives the workers, most of whom are in their twenties, full representation on the staff trust and a 37,5% shareholding in Abrina.

The staff trust is therefore valued in excess of R375 million.

The other two aspects of Sasol’s BBBEE initiative relate to the public offer and the shares allocated to Sasol employees.

The employees’ stake is well above most similar deals concluded to date and none of the 70 fuel station franchisees hold more than 10% of Abrina’s equity.

Speaking to The Witness while on one of his regular visits to his home city, Ramluckan, who began his career as a geologist but soon developed a passion for finance, explained: “I own a Sasol filling station as one of my investments. Over the years, I built up a good relationship with the dealers in the Sasol network. I got the sense that South Africa has good business people with a fair amount of money but not enough opportunities to make the right sort of empowerment investments. I thought that if we could get into a cohesive group, it could strengthen our powers of negotiation with Sasol.”

“I created Abrina last year. I sent out an open invitation to the franchisees — some 230 of them. It was quite a process.”

The funding that Abrina was required to come up with amounted to tens of millions of rands and was put in — in the form of cash — by Abrina’s shareholders.

The staff portion was facilitated through a loan from Abrina, which will be repaid after 10 years, upon which time a portion of the shares may have to be sold in order to repay the loan if the dividends have not paid the full amount of the loan.

As for the staff members, they have been encouraged to hold onto their investments for at least 10 years.

“The allocation of shares to staff members varies between sites but each of my staff will get R200 000 or so’s worth of shares at the issue price. It’s costing them absolutely nothing. It is used as a retention tool because they accrue 10% of their shareholding every year. This is not just a retirement cushion, it’s a once in a lifetime opportunity for the staff.”

The staff could get as much as double their initial allocation if they remain for 10 years due to reallocation of surpluses.

Ramluckan believes that empowerment can be done properly, provided that the powers that be want staff and ordinary people to truly benefit from such deals.

“Now, due to the way in which this deal is structured, there are other large companies that are keen to get involved with Abrina as a shareholder. The staff will benefit from all other deals that Abrina concludes. We’re putting cash into our deals and not relying purely on debt finance. People see this as real empowerment and not as a smoke screen.”


Who is Vijay Ramluckan?

Born in Pietermaritzburg, Vijay Ramluckan spent the first 18 years of his life in the city, attending Raisethorpe Secondary School and Silver Heights Secondary School.

He completed a Bachelor of Science (Honours) in Geology and a Masters Degree in Geochemistry at the then University of Durban-Westville.

He had to complete a five-year bursary obligation with major mining group Goldfields and began work as a geologist on Goldfields’ international projects in the early nineties.

“These were ‘greenfield’ projects, and I really enjoyed the economic and financial aspects of the projects. I worked in a

multidisciplinary team and interacted with professionals with other areas of expertise.”

Ramluckan was unable to convince Goldfields to allow him to pursue two avenues of career growth, namely working on mineral economics at the group and pursuing a Masters in Business Administration.

“The mining industry was still very conservative in those days.” He added: “We [as school pupils] knew nothing of the career opportunities in merchant banking and project finance.”

He eventually parted ways with Goldfields, spending five years at the Industrial Development Corporation (IDC).

“It was the best thing I’ve ever done in my life. It is the best institute in terms of training opportunities and gaining

experience, purely because of the number of deals I was exposed to. I had to come up with innovative structures for deals and each deal was unique in terms of its structure. These things were new for the BEE partners. BEE was still in its infancy.”

After working his way up the ranks at the Industrial Finance Division of the IDC, he joined Future Growth Asset Management to manage the Structured Equity Fund in 2000, which at the time was the largest BEE fund comprising listed companies.

“Those deals were based purely on share price appreciation. It lacked commitment and robust structuring and no contingencies were in place when the market crashed.”

He joined the National Empowerment Fund in 2002 as the head of investment services, where he liaised directly with the Department of Trade and Industry and the National Treasury, among others.

During this time, he held various board positions, including one with the N3 Toll Road.

In 2004, he parted ways in order to start his own business, focusing on Broad-based Black Economic Empowerment.

Ramluckan also holds a

Masters in Business Admin-

istration and was a technical advisor to the BEE Commission, which was headed by Cyril Ramaphosa. • Thembeka Sibisi is a community worker with experience in human rights issues.

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