By: Gugu Lourie (Tech Financials)
Ericsson South Africa has concluded a broad based black economic empowerment (BBBEE) transaction with a company led by Gift Mphefu for an undisclosed amount.
The transaction resulted in the sale of 25.1% equity stake in Ericsson South Africa to Ringgold Consortium.
“This announcement follows an extensive process to identify a partner who shares our commitment, our vision and philosophy. We look forward to working with our new shareholders and we’re confident that our partnership will further establish Ericsson as a preferred business partner in South Africa,” said Magnus Mchunguzi, Managing Director of Ericsson South Africa.
BBBEE is designed to widen ownership of the South African economy, which is still mainly in white hands 20 years after the end of apartheid.
Ericsson is a market leading provider of communications technology and services. It is the preferred supplier to leading operators across Africa and has been instrumental in rolling out communications networks across the region.
Chaired by Mphefu, Ringgold Consortium was established as a special purpose vehicle by young professionals active in the information communications technology (ICT), engineering, and financial services sectors.
Other Ringgold shareholders are Calvo Phedi Mawela and Diliza T. Mbete.
Under the agreement, Ringgold Chairman Gift Mphefu and his co-shareholder Thabi Leoka have been appointed to the Ericsson South Africa board as non-executive directors.
“Ringgold is excited at the opportunity of working with a global leader that has revolutionized the way people communicate and connect. We look forward to being part of this journey that uses the transformative power of ICT to make a positive difference in our communities,” said Mphefu.
A number of global and local firms have sold portions of their local units to black investors to meet the regulations.
However, in 2011 Microsoft opted to invest in local businesses because, as with other U.S firms, it cannot sell a stake in its South Africa unit for regulatory and other reasons.
Microsoft South Africa, a unit of the world’s largest software firm, will invest 475 million rand ($69 million) in four black-owned software firms to meet BBBEE rules.
This piece was lifted from Tech Financials