- Abu Dhabi-based Imperial Capital Investments and the Landile Shembe Foundation have emerged as anchor investors for the SA Express equity crowdfunding initiative.
- This is according to Uprise Africa, which is facilitating the deal.
- State-owned regional airline SA Express was placed under provisional liquidation on 29 April 2020 after its business rescue process failed.
Abu Dhabi-based Imperial Capital Investments and the Landile Shembe Foundation have emerged as anchor investors for the SA Express equity crowdfunding initiative, according to a statement released by Uprise Africa, which is facilitating the deal.
Uprise Africa is an "equity crowdfunding" platform that allows investors from around the world to invest capital into South African businesses in exchange for equity shares. The CEO of Uprise Africa is Tabassum Qadir, the former co-chair of grounded low-cost SA airline Skywise.
State-owned regional airline SA Express was placed under provisional liquidation on 29 April 2020 after its business rescue process failed. The equity crowdsourcing proposal by a group called Fly SAX, backed by some employees, was selected as the preferred bid. This came after the airline's provisional liquidators concluded their process of due diligence on the 17 expressions of interest in the group.
The idea is that Imperial Capital and the Landile Shembe Foundation will join FLY SAX as anchor investors. The purchase price for the Fly SAX bid is R50 million, payable in the form of a bank guarantee to be provided to the joint liquidators. South African law prohibits more than 25% foreign ownership in local airlines.
According to the statement, Imperial Capital is a licensed private fund and investment company. It has $650 million worth of assets under management, with interests in energy, healthcare, education, infrastructure, and manufacturing industries. Its investor base is split between Asian and European stakeholders.
The statement says the Landile Shembe Foundation controls the commercial rights of the Shembe family with diversified assets valued at over $500 million. "It is an organisation focused on the incubation of youth entrepreneurs in the "Shembe Church" community that is made up of 6.7 million members."
"Uprise Africa takes pride to hold true to its mission of providing access to compelling opportunities for both institutional and smaller investors. The capital raised will be structured and backed by these anchor investors to finance and scale employee ownership conversions in a worker-centric and transformative way. The social capital will serve as a tool for real, transformative change in the ownership model," says Tabassum Qadir, CEO of Uprise Africa.
The transaction is subject to approval by, among others, the provisional liquidators and the Department of Public Enterprises.
A court date has been set for 28 January 2021 in order to give interested parties more time to conclude their proposed deals for the disposal of the airline.
Equity crowd funding
The retail investors will not be subscribing for shares directly in Fly SAX, which is a private company and is not permitted by law to offer its shares to the public. The Uprise Africa Fund is an unlisted public company and will subscribe for shares in Fly SAX by means of the funding raised in this offering. The Uprise Africa Fund will in turn issue shares in itself to investors, and these shares will be economically linked to SA Express.
Furthermore, Fly SAX has indicated that it does not require any of the movable assets of the airline - which would include aircraft. All the movable assets will, therefore, be sold on a public auction and the proceeds applied to the purchase price.
Government gave SA Express more than R1.2 billion in urgent financial support for the 2019/2020 financial year. The DPE has in the past acknowledged that mismanagement took place at the airline. At the beginning of October North West premier Professor Job Mokgoro testified at the Zondo Commission into state capture that a decision to pay R50 million to SA Express by the government of the North West province was made by the "decision makers" as a priority project and he was just the "postman" in the process.