Johannesburg - African Bank Investments Limited (Abil), the largest lender to low-income earners, yesterday launched the first phase of its black equity ownership programme by starting a book-building exercise to raise R76 million for Eyomhlaba.
Eyomhlaba, the limited purpose vehicle for its black equity ownership programme, was created to facilitate the sale of 6.5 percent of its shares to black investors including its customers.
Abil said yesterday that Eyomhlaba had issued a prospectus outlining its plans to raise the money through the issue of 34 250 000 ordinary shares in Eyomhlaba. The offer would open on Monday and close at the end of November.
Abil said in May that the programme was designed so that direct black shareholding in its business could climb to more than 15 percent within 10 years.
Abil inherited 27 500 black shareholders after the unbundling of New Africa Investments, but these shareholders collectively held only 0.1 percent of Abil's shares.
Its intention was for the initial 6.5 percent holding to accrue dividends, which could then be used to buy more shares in the open market, over the 10 year period, thereby continually increasing its holding.
The bank said Eyomhlaba's sole objective was to buy and hold Abil ordinary shares for the duration of the empowerment period for the benefit of its shareholders.
Shares have been offered at a discount to black Abil employees, white employees who do not receive options, black shareholders, clients and the public.
Abil's programme promised discounts according to what Abil termed its "proximity principle". Employees get the biggest discount, up to 85 percent, and members of the public with direct involvement in the company get the smallest discount, at 60 percent.
Leon Kirkinis, the managing director of Abil, said the deal would be financed in three parts: the issue of 21.2 million of its own shares worth R350 million, the Eyomhlaba capital raising, and R150 million worth of senior preference share funding from Rand Merchant Bank and Barclays.
Abil's programme, which is expected to benefit more than 30 000 people, is more expensive than some of the empowerment deals announced by other banks, such as Absa.
A once-off R350 million cost to shareholders through the dilution of their shares results in a cost of 4.5 percent - the upper end of the 2.5 percent to 5 percent market norm.