15 April 2005
Source: MiningWeekly Online, by Liezel Hill
Black-owned investment company Aka Capital has acquired 26% of underground mining-contracting company Murray & Roberts Cement-ation in a recently-announced deal, effective January 1 this year.
Mining Weekly spoke to Murray & Roberts group executive director Sean Flanagan and Aka Capital CEO Sam Nematswerani about the background to, and future of, the relationship between the two companies.
Flanagan explains that, from a Murray & Roberts perspective, there were two key issues which influenced the decision to sell the stake to Aka Capital.
“First and foremost, we are a South African company. “This means that, as a matter of course, we support the objectives of broad-based black economic-empowerment (BEE) and the objectives of the mining charter.” This was underlined when, in July last year, Murray & Roberts RUC merged with the Cementation & Roberts Cementation.
An important part of the merger deal was a commitment by Murray & Roberts to bring an empowerment partner to the table.
Secondly, Murray & Roberts was looking for a partner that would be eager to actively engage with the construction and mining sectors.
“Most BEE companies prefer the more 'glamorous' industries, rather than the nitty-gritty of industry and mining,” says Flanagan.
The company wanted a partner with whom real value could be exchanged, so that the 74% held by Murray & Roberts shareholders would not be diluted in value, but would increase beyond the worth of the original value.
Nematswerani agrees: “We at Aka Capital are primarily businesspeople.
“What we bring to any partnership is business experience and know-how, not simply black skin,” he says.
Further, the frenzy around empowerment in the South African market at the moment is undoubtedly a good thing for the country, but Aka Capital intends to keep its focus firmly on good, solid business principles, rather than being caught up in the flurry of BEE deals being clinched across all sectors.
“At the end of the day we are driven by forming partnerships which result in increased value and benefits for all concerned,” he says.
Both Flanagan and Nematswerani agree that it is crucial for both companies and their respective shareholders that the transformation process does not affect delivery or bottom line.
Aka Capital is something of a cross between a private-equity group and an investment-holding company, explains Nematswerani.
The company focuses on investing in a small number of unlisted companies, to insure that Aka Capital is able to become actively involved in the businesses it partners with.
“We are not one of those BEE partners you meet at the signing, and then see once a year to pick up the cheque,” says Nematswerani.
“It must be clear to us how Aka Capital can add value to an organisation before we will consider any relationship.” The company is 60% black-owned, with institutional shareholders Nedbank and Old Mutual providing finance, as well as credibility.
Aka Capital chairperson Reuel Khoza brings with him experience in successful transformation in his role as chairperson of State-owned power-utility Eskom.
Khoza and Nematswerani have joined the board of Murray & Roberts, with Khoza as chairperson.
Flanagan adds that Khoza has extensive experience as a consultant in the transformation of organisations of all sizes.
In working to meet the objectives of broad-based BEE, Murray & Roberts is not only concerned with equity BEE, but is engaging all seven pillars of the charter, he says.
“Transformation of an organis-ation needs to be implemented in the leadership first, in order for it to filter down,” says Nematswerani.
The next issues on the agenda are skills development and employ-ment equity, with Murray & Roberts also looking to increase its involve-ment in the upliftment of local communities.
“At the moment, our top management are sitting down together with Khoza and Nematswerani, examining the current situation, setting targets and drawing up strategies for the transformation of the company,” say Khoza and Flanagan.
On a different note, both men voice concern over the current conflict between the mining charter and the recently-released BEE Codes of Good Practice.
Flanagan adds that he feels there is a possibility that some parts of the proposed legislation may, in fact, stifle broad-based BEE, but he is sure that sense will ultimately prevail, and emphasises that the spirit of the BEE legislation, and BEE as a whole, is fully supported by the leadership of Murray & Roberts Cementation.