South Africa: AB InBev’s South African Breweries to list its black economic empowerment ownership scheme on the JSE

AB InBev’s South African Breweries (SAB) unit plans to list its new R5.4 billion broad-based black economic empowerment (B-BBEE) ownership scheme, dubbed SAB Zenzele Kabili, on the JSE on April 15, Moneyweb.co.za reported on February 18.

The move, which will also see black retail investors now being able to secure shares in the beer giant, was announced by Richard Rivett-Carnac – SAB and AB InBev Africa mergers, acquisitions and treasury director – at an event at the JSE in Sandton on February 17.

It comes as the landmark SAB Zenzele B-BBEE scheme is set to wind down in April, having been launched 10 years ago under the old SABMiller stable. SAB, which is now part of the world’s largest brewing group AB InBev, forecasts that the original scheme will have generated almost R14 billion in value for South Africa upon its unwinding.

“SAB Zenzele has disbursed some R4 billion to shareholders since its inception in 2010, with an additional R9.6-billion to be paid out when it winds up in April,” says Rivett-Carnac.

He adds that he is looking forward to the next chapter with SAB Zenzele Kabili.

“We are excited to offer SAB Zenzele shareholders the opportunity to partner and invest in SAB Zenzele Kabili and build on the strengths of SAB Zenzele, empowering qualifying shareholders even further as we enter the new decade.”

The initial SAB Zenzele deal transferred around 8.45% of ownership of SAB shares to more than 40 000 shareholders, including 29 000 retail shareholders from previously disadvantage communities, 13 000 current and former SAB employees, and the SAB Foundation. However, the scheme was privately held.

Rivett-Carnac told Moneyweb that while the original B-BBEE scheme was ground-breaking and delivered meaningful wealth and empowerment to thousands of South Africans, there were “learnings” that have been considered in launching the new Zenzele Kabili plan.

“One of the areas was around liquidity of the shares, with shareholders having to hold on to [their shares] for 10 years as part of a privately held scheme.

“With our new scheme, having it listed on the JSE’s BEE segment means that it will be a lot more liquid. It also means that black retail investors and empowered groups can buy into SAB and effectively AB InBev as a global player,” he says.

Rivett-Carnac notes that the target price for Zenzele Kabili shares on the JSE will be around R40 a share, which will make them accessible, considering that the global AB InBev group’s share price is trading on the JSE at around R1 100 a share.

“The opportunity to own AB InBev shares through SAB Zenzele Kabili means these shareholders will participate and benefit from the growth of our global business. However, there will also be enhanced liquidity and transparency of pricing for shareholders as part of the scheme.”

Another change is that the new scheme will be based on “the principle of equal allocation” to employees, no matter what level they are at, he says. All employees will be part of the Employee Share Ownership Plan (Esop) aspect of the scheme.

SAB says the Zenzele Kabili transaction will be funded through a combination of:

R678 million equity contribution from existing SAB Zenzele shareholders;
R600 million equity contribution from a new broad-based Esop funded by SAB;
R344 million reinvestment by the SAB Foundation;
R811 million of AB InBev discounted shares from SAB; and
R2 973 million of 10-year preference share vendor funding from SAB.

“SAB is committed to contributing to long term economic growth and development in South Africa,” says Andrew Murray, an AB InBev executive who was appointed vice president of finance at SAB following the merger in 2016.

He says that with empowerment and ownership being “key imperatives and core beliefs” of SAB, it intends to list the new scheme on the JSE on April 15.

Jane Makhanya, owner of Getty’s Tavern in Tembisa and one of the more than 29 000 existing SAB Zenzele retailer shareholders, says she is proud that her family-run tavern of 30 years was part of the original SAB BEE initiative.

“We invested at the start and have benefitted from dividends over the years. I am looking forward to the payout in April, however, I want to re-invest in the new SAB Zenzele Kabili scheme. I am really thankful for SAB to have given us this great opportunity.”

17 February, 2020