Johannesburg - Black Management Forum Investments (BMFI) will invest only in firms that are profitable, well run and exhibit the rich diversity of the South African population and in which no person's entry and development are subjected to barriers unrelated to work.
This is according to BMFI managing director Campbell Bomela.
Last week BMFI and Tshirundu Investment Holdings bought a 25 percent stake in Adcorp Communications Solutions, worth R93.5 million.
This was BMFI's second deal in this company in three months. It formed Adcorp Flexible Staffing Solutions, in which it partnered with black investment company Zico and African Harvest Capital, taking a 25 percent stake.
Bomela said:
"The company sees meaningful empowerment, on equity level, as that shareholding which enables one to influence and secure special resolutions and block unfavourable ones."
Bomela said he felt that BMFI, with an individual membership of 3 500 and 100 corporates, did not need to have representation on the board of every company it invested in.
Its members, most of whom are managers, were expected to act as foot soldiers and monitor what was going on in a company that BMFI invested in because they were already working for it.
The main component of BMFI is the Black Management Forum (BMF), which holds 53 percent of the shares.
The other shareholders are individual BMF members, the staff share scheme and the Sanlam Development Fund, which holds 31 percent.
BMFI was established in 1996 as part of BMF, which itself was formed in 1976.
When BMFI and Tshirundu went into the Adcorp deal there were many questions left unanswered, especially how the issue was to be financed and who would decide on the super profit, which is based on the increase in the company's profit compared with its past financial year. This will be split 50:50.
Bomela said BMFI and Tshirundu would not pay anything for their Adcorp Communications Solutions stake. They would use their expertise to get clients, and that would offset the debt to the company.
BMFI also has a 27 percent interest in Keboes Fruit Farms in Upington, which exports grapes. The company is worth about R200 million.
It is also involved in the Gold Reef Casino, a R894 million development in the south of Johannesburg, having raised R17.5 million for equity. The company now owns 8.6 percent of the issued share capital.
BMFI has a 5 percent share in the R250 million Gold Horse Casino in Pietermaritzburg.
It raised R25 million and acquired 25 percent of Uthingo Management, which operates the national lottery on behalf of the National Lotteries Board.
According to Bomela, this stake was recently valued at R41 million.
BMFI has acquired 3 percent in Peoples Bank, which as a capital retail and commercial bank is valued at R1.6 billion.
Bomela said that with companies that had a net asset value of R150 million or less, BMFI would acquire a minimum of 26 percent of the equity. BMFI would acquire a minimum of 10 percent in companies that had a net asset value of more than R150 million and less than R500 million. 0It would acquire a minimum of 3 percent of equity in companies with a net asset value of R1 billion or more.