Phuthuma Nathi revisited
There seems to be a lot of unhappiness and complaints on various websites and blogs about this initiative. I’ve been wondering why and I think the following is true:
This is one of the first very big broad-based offerings to the public in general. Most other BEE deals are between the companies themselves and some big BEE consortium. Those deals tend not the get any publicity until they are done. Only the really big ones even make the main pages of the newespaper – most are announced in complicated terms in the business press. As a result the general public tends not to see how these big deals work. What they don’t realise is that in almost all BEE deals, the shares are offered to the investors at large discounts to their trading value, or the company itself helps finance the deal.
In the case of Phuthuma Nathi, Multichoice is making this offer to the general public (but naturally limiting it to black beneficiaries as it is a BEE deal – no different from the SASOL deal, or the Netcare deal, any of hundreds of other deals). The only reason that there is the outcry is because the public is aware of it. It is even advertised on DSTV channel 10. Maybe it is true to say that Multichoice is advertising to a larger white audience than black (I don’t know the demographics of DSTV viewers). I understand that white viewers don’t want to be reminded that they cannot participate in this initiative, and that’s probably why there is this general unhappiness.
I think it is far better for Multichoice to have tried to spread the shares around amongst many shareholders, rather than just offered them to the usual black participants. The problem as I see it is the large backlash may discourage other firms from also offering their shares to a wider audience. Let’s be frank – BEE deals are going to continue to happen – and by definition white people will be left out of the deal. However I would far rather see more of the Phutuma Nathi deal than the Basil Read deal – it will certainly help even out the wealth distribution – after all what’s the points in making any of the black big dealmakers even richer. I’m just concerned that other companies, seeing the publicity will choose to go the private placing route – which will not be as good for the cause of broad based black economic empowerment.