Since the initial creation of YeboYethu in 2008, we have assisted them and been part of their journey. This new deal will not only include a R3.2bn special dividend to YeboYethu shareholders, and include one of the highest returns to shareholders in a BEE deal of this type, but will also allow them to retain their shareholding in an even bigger YeboYethu.
This month we will help Vodacom and YeboYethu implement a new R16.41 billion BEE deal, re-empowering YeboYethu for a further 10 years after the initial empowerment deal was due to come to an end in October this year. In terms of the new BEE deal, YeboYethu and its shareholders will become the third largest shareholder in Vodacom Group Limited.
This new BEE deal is highly significant in the South African market as –
- it is the biggest BEE deal in the ICT sector to date;
- it has delivered the best returns to shareholders of any listed BEE deal to date;
- YeboYethu will be the largest BEE vehicle on the BEE Segment of the JSE by market capitalisation following the deal; and
- it includes the second largest preference share deal by quantum.
Though our firm, as a whole, has every right to proudly associate with this deal, we must acknowledge the individual specialists who were instrumental to the deal’s success: Director, Christopher Baird led a multi-disciplinary team including Director and BEE specialist, Verushca Pillay, together with an impressive list of CDH’s Corporate & Commercial and Tax experts - Directors, Ludwig Smith, Jenni Darling, Emil Brincker, Willem Jacobs, Nkcubeko Mbambisa, Lilia Franca, Yaniv Kleitman and Johan Latsky; Senior Associate, Jerome Brink; Associates, Alison Vadachalam, Batool Hayath, Kwadwo Owusu and Jess Cameron; and Candidate Attorney, Murendeni Mashige.
This extensive team of experts acted for Vodacom Group Limited and YeboYethu (RF) Limited.
In terms of the new deal, the current BEE shareholders of Vodacom (Proprietary) Limited (the holding company of Vodacom's South African interests), being YeboYethu, and indirectly Royal Bafokeng Holdings and Thebe Investment Corporation, will consolidate their shareholdings in Vodacom (Proprietary) Limited in YeboYethu (such that indirectly Royal Bafokeng Holdings and Thebe Investment Corporation become shareholders in YeboYethu), and YeboYethu will exchange those Vodacom (Proprietary) Limited shares for shares in Vodacom Group Limited, the holding company of both Vodacom's local and international operations.
In the course of exchanging their shareholding, YeboYethu will acquire further shares in Vodacom Group Limited using (i) debt funding from third-party funders and Vodacom Group Limited, (ii) further equity from indirectly Vodacom Group Limited through the introduction of a new employee share ownership scheme for the benefit of Vodacom employees, and (iii) a discount from Vodacom Group Limited.
Following the implementation of the transaction, the current BEE shareholders will, through YeboYethu, hold c.6% of Vodacom Group Limited, and Vodacom Group's effective BEE shareholding will increase to c.20%.
As part of the deal, the current shareholders of YeboYethu will also receive a significant special dividend in the amount of R73 per share, or c.R3.2 billion in aggregate. This equates to 2.9 times the YeboYethu shareholders' original equity contribution.