EMPOWERMENT: Metlife's Shining Credentials
Recent Western Cape Business News
At a general meeting held yesterday an overwhelming majority of Cape Town-based Metropolitan shareholders (in excess of 99%) approved changes to the financing structure of the group’s long-term partnership with Kagiso (KTI).
As Wilhelm van Zyl, Metropolitan’s group chief executive, points out “For us, transformation is not only a moral obligation but also a business philosophy and imperative. It is not tied to scorecards or targets but is an ongoing process, encompassing all the categories of empowerment, including ownership.”
In 2004 the first phase of the partnership got underway. KTI acquired a 10% stake in Metropolitan through the purchase of five-year convertible redeemable preference shares in the group, making use of both their own funds and external financing.
The second phase commenced in December 2005 when KTI utilised external funding to purchase additional preference shares that increased their holding to 17%. At this juncture, the Metropolitan Empowerment Trust was established via which Metropolitan management acquired 25% of KTI’s stake.
Over the years KTI have gradually increased their shareholding through the acquisition of ordinary Metropolitan shares in the open market.
By December 2008, KTI and the empowerment trust together controlled approximately 24% of the issued shares in Metropolitan.
Failure to restructure the first phase financing by 30 September 2009 could have jeopardised the partnership. Despite the severity of the current economic recession, funding for the extension of the term of the first phase preference shares to 2012, the third phase of the partnership, has been secured via a consortium of banks.
“Although a great deal has already been achieved from an economic empowerment perspective, we are confident that, through our continued relationship with Metropolitan and our commitment to partnering with them as an organization whose values reflect our own, meaningful transformation can become a reality,” says Andile Sangqu, group executive director at KTI.
“Not only has Metropolitan succeeded in retaining a meaningful proportion of black shareholders but it is our sincere hope that our mutually beneficial relationship will continue to add value. KTI will, we are sure, continue to enjoy tangible economic advantages, both in the short and the long term, as was our intention when we decided upon this investment some five years ago.”
At an estimated 20% after the refinancing, Metropolitan’s direct black ownership percentage will remain amongst the highest in the financial services sector, and well in excess of the requirements of both the department of trade and industry’s codes of good practice for broad-based black economic empowerment and the Financial Sector Charter.
“Neither Metropolitan nor KTI believes in a tick-box approach to transformation; both groups are committed to the spirit of empowerment, not to the letter of the law,” concludes Van Zyl.
“Our efforts to support national initiatives in this all-important arena will continue unabated.”
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