South Africa’s telecoms giant Vodacom is preparing to list its BBBEE investment shares on an over the counter (OTC) trading platform with a background of a major misfire by its main competitor’s initiative, the MTN Zakhele investment scheme.
Vodacom plans to list its Yebo Yethu shares on the OTC platform mended by Equity Express on the 3rd of February 2014. It will join the platform which features several other BBBEE shares including the Media24’s Welkom Yizani, Multichoice’s Phuthuma Nathi, Imperial’s Ukhamba and African Bank’s Eyomhlaba shares.
The Yebo Yethu trading platform will be a critical factor for the public perception of the scheme given the prevailing sour experience of investors in MTN Zakhele. After promising its 120000 investors a platform to trade their shares from the 25th of November, MTN Zakhele’s new OTC platform has misfired in a big way. Technical glitches saw the trading platform, mended by a company called, Velocity Trading, suspended on the third day of trading. The MTN Zakhele board has promised to have the platform back up in January 2014.
The Vodacom’s Yebo Yethu shares are headed for the tried and tested Equity Express OTC trading platform.
Vodacom established the Yebo Yethu scheme in June 2008 which was back then valued at R2.2bn. The establishment of the scheme formed part of a broader BBBEE initiative which transferred about 6.25% of Vodacom SA shares to a broad consortium. The R7.5bn BBBEE deal featured Thebe Investments and Royal Bafokeng Holdings as strategic equity partners and also Vodacom SA employees and black business partners.
Yebo Yethu was the portion of the deal which gave the black public an opportunity to participate in the deal. About 100 000 investors, black people and groups, responded to the Vodacom invitation.
YeboYethu subscribed for about 3% of Vodacom SA shares, 7.2 million ordinary shares and 82.8 million A shares on behalf of the black public. About R360m would come as equity from subscription by investors and R1.6 billion came via vendor financing (loan from Vodacom). The scheme came with R225m as upfront discount.
The idea was to use dividend flow from Vodacom SA to retire debt. The scheme also came with a call option for Vodacom which means the company will buy back the shares at maturity of the scheme in 2017.
Investors entered the scheme on an equity portion of R25 per share but the minimum subscription for the Public Offer was for 100 Shares equating to a minimum of R2500 entry level. When the scheme start trading on the 3rd of February 2013 investors will be hoping that it trades far above the R25 they paid at inception. Many investors will be anxious at least those who have watched the disappointing outcome of the Naspers/Media24 Welkom Yizani scheme which started trading last week and settled around R10 per shares, the same amount investors paid on entering the scheme seven years ago. Some investors in Welkom Yizani sold at levels below R10 per share.