Adcorp is one of those companies whose business demands that it takes empowerment seriously. The listed group is the holding company for businesses focused on human capital, human resources and communications advisory services.
Its communications interests include Semeka TWS and Research Surveys. Its human resources business includes Premier Personnel and back office group Adcorp Accountability.
Many of Adcorp's clients are in the public sector. It shows.
Half of its board is black, though most are nonexecutive independent directors. One of the four executive directors is black, though he is in the typical position of human resources. The group scores well on affirmative procurement, with up to 67% of its procurement spend going to BEE companies. However, the group's high score is less about excellence in one area and more about an overall balance in all the factors of empowerment.
Last year the group concluded two empowerment deals. The first was in its staffing solutions business with Zungu Investments. The second was in its communication business with Tshirundu Investment Holdings, a black-owned investment company, and Black Management Forum Investments Co (BMFI), the investment arm of the Black Management Forum.
As a result, the group comes first in our ranking of nonownership BEE transactions.
Support services runner up Bidvest Group has an empowerment track record that illustrates the bumpy ride that black economic empowerment (BEE) has been over the past few years.
Despite numerous empowerment initiatives and having a management team that appears to consider BEE a serious strategic issue, it has found itself having to battle poor empowerment public relations.
Two years ago, the group entered into an empowerment deal to sell 15% of its equity. It was one of the largest empowerment deals ever because of the size of the group - Bidvest is the second-largest company in the country by turnover.
The consortium that bought into the industrial and services group is led by WDB Investments, the investment arm of a microlending organisation targeting rural women, and Bassap Services Investments, a Cape-based company whose shareholders include entrepreneurs and community groups.
However, the largest shareholder, the Public Investment Commissioners (PIC) voted against the deal - and lost.
The PIC voted against the deal because the transaction scheme was an option arrangement and the PIC is opposed to options and deferred payments because there is no guarantee there will be a transfer of ownership.
It is what PIC CEO Brian Molefe calls "a promise to do an empowerment transaction at some future date".
As Bidvest defended its scheme it lost credit for its other empowerment initiatives, including the positive spin-offs of broad-based empowerment within the group.
Over the past five years Bidvest has concluded a number of deals through its many subsidiaries, including Rennies Financial Services and LithoTech, one of the largest printing companies in SA.
The group has invested more than R500m in empowerment initiatives. The amount invested will increase as it buys out empowerment shareholders from its subsidiary businesses in line with its move to concentrate on empowerment at holding level.
Empowerdex calculates that Bidvest's investment in BEE groups amounts to 5% of total assets. The group is one of the larger on the JSE by capitalisation.
However WDB director Sonja Sebotsa says too much focus has been on the mechanics of the deal and not enough on the flow-through effects, regardless of whether the equity transaction takes place. As a result of the deal, the empowerment partners are able to put board members and managers into Bidvest. They also control the transformation committee.
The group has performed well in the rankings for its broad-based empowerment, coming in 20th overall. But without ownership, its empowerment score of 56% falls.
This highlights the perils of focusing exclusively on ownership.
For Bidvest the score is important because it does, and will continue to do, business with government. There is also the lucrative port concession on the horizon.
Bidvest's future may lie less with defending its empowerment ownership. It should focus on transformation and boost its overall performance as per the balanced scorecard.
