A company set up with the sole intention of mobilising capital to fund black economic empowerment (BEE) transactions plans to list on the JSE Securities Exchange next month.
Makalani Holdings, which aims to bridge the gap between strong demand and a latent supply of BEE funding, is being set up with the help of FirstRand, the country's second-biggest financial services company by market value.
Aiming for a market capitalisation of R2.5 billion, Makalani said at its launch yesterday that it intended to raise a total of R2 billion through a private placement and R500 million through a public offer. The listing gives investors the chance to invest in BEE as a sector.
Chief executive Vusi Mahlangu said Makalani would target large-scale transactions in companies and projects.
The diversification of the investment base would significantly lower risk.
By offering an alternative source for mezzanine funding, which is an intermediate level of funding that lies between the provision of a loan and taking an equity share in a new company, the company's aim was to deliver attractive returns for investors while earning financial sector charter points.
The financial services industry is required to invest R124 billion in charter-compliant investments by 2008.
The charter council has already earmarked R42 billion for the financing of low-cost housing, R25 billion for infrastructural finance and R5 billion for the financing of black small business enterprises.
Herman Bosman, the head of corporate finance at FirstRand's Rand Merchant Bank (RMB), said Makalani would focus on mobilising funding for BEE deals and other targeted investments, including low-cost housing and infrastructure.
He said funding was difficult to source. What Makalani aimed to do was bridge the gap between a strong demand and latent supply side funding.
RMB has provided the company with R500 million in seed capital, giving it a 20 percent stake in the still-to-be-issued shares. The other 80 percent will be held by investors.
RMB will, however, hold a significant 75 percent in Makalani Manco, the company set up to manage Makalani's funds.
The other 25 percent in Makalani Manco will be held by BEE partners. Sello Moloko and Thabo Leeuw's Thesele Group and Sonja Sebotsa's Women's Development Bank (WDB) Group will hold 5 percent each.
Tamela, a newly incorporated black-owned company established to find opportunities in the BEE space, will hold the other 15 percent of Makalani Manco.
Tamela's founders - who include Mahlangu, the former head of public sector finance at Investec Bank, and Sydney Mhlarhi, the previous director and joint head of Standard Bank's Acquisition Finance Group - are to head Makalani as chief executive and chief investment officer, respectively.
At the head of the Makalani board, taking the position of non-executive chairman, is banking stalwart Vivian Bartlett, who retired as deputy chief executive of FirstRand Bank last year.
"There is a strong association with RMB but it is important that we remain independent," said Mahlangu, adding that no arrangement had been made as to sharing of deal flow between Makalani and RMB.
Sebotsa, whose WDB Trust is participating in the transfer of 10 percent of FirstRand's business to BEE partners, said Makalani was an "innovative response to the challenge presented by BEE". She said the company's establishment was a recognition that "BEE does bring opportunities".
Shares in FirstRand added 35c to R13.20 yesterday and the banks sector rose 2.14 percent.