The 100 000 Vodacom Yebo Yethu investors will approach the launch of the BBBEE scheme trading platform with a great level of anxiety when it opens on Monday the 3rd of February 2014.
Experiences from other similar BBBEE schemes, Nasper’s Welkom Yizani and MTN Zakhele have not inspired confidence.
The Yebo Yethu shares are set to be traded on an over the counter (OTC) trading platform. Launched in 2008 as part of a bigger R7.5bn Vodacom BBBEE deal, Yebo Yethu (Public) locked in its investors for five years. On Monday, these investors will have a chance to trade their shares with new black investors and will be hoping for pay day. The big question is: Will it be pay day?
The Yebo Yethu OTC is run on the Equity Express trading platform which hosts a couple of other BBBEE schemes including the Media24′s Welkom Yizani, Multichoice’s Phuthuma Nathi, Imperial’s Ukhamba and African Bank’s Eyomhlaba shares.
Investors will enjoy some comfort about the stability of this trading platform as opposed to the troubles experienced when MTN Zakhele’s trading platform was launched in November last year. The MTN Zakhele trading platform collapsed two days after the November 25 2013 launch. It could not handle high volumes and had to be suspended only to be launched last week on the 29th of January 2014.
The experience coming out of Nasper’s Welkom Yizani shares weighs heavy to memory. Welkom Yizani is the scheme which owns 15% of Media 24 and was opened for trading amongst black investors on the 9th of December 2013. The performance of the scheme has disappointed investors who paid in R10 per share in 2006. Welkom Yizani share price has settled around R10 since the launch of the trading platform which means investors have lost money in the scheme. Some investors sold at levels below R10 after the share reached a low of R7.90.
There is some similarity in Nasper’s Welkom Yizani and Vodacom’s Yebo Yethu schemes. Both are organised by JSE listed companies who have growing operations outside their country of origin, South Africa. Both BBBEE schemes have limited the exposure of their investors to the relatively matured South African market.
The underperformance of Welkom Yizani shares is partly attributable to the fact that it is invested in a matured operation, Media 24 a South African media operation with heavy bias towards print/newspaper business. Whereas other Naspers operations, mainly offshore internet operations, offer great potential for growth which explains the appreciation of the Naspers share price to breach R1000 per share mark from levels below R500 in 2012.
This could have been a different story had Naspers organised its BBBEE schemes in a way that offers exposure to its lucrative international operations. The same can be said of Vodacom with its Yebo Yethu scheme.
The Yebo Yethu scheme is invested in Vodacom South Africa and not the JSE listed Vodacom Group. Whilst Vodacom South Africa accounts for a sign significant majority of Vodacom Group revenue, the South African operation is facing serious challenges made by a maturing market. This fundamental will influence the price at which Yebo Yethu shares will trade at. Investors who paid in R25 per Yebo Yethu share will be hoping to sell at a level far above R25 to make profit. But then the apparent under-performance of the ESOP chapter of Yebo Yethu is not inspiring confidence.