Nampak strengthens its BEE profile

After the completion of a deal with a black private equity fund manager, whose founders include company law titans Tembinkosi Bonakele and Tembeka Ngcukaitobi, packaging producer Nampak is looking to strengthen its BEE profile.

Nampak on Thursday said it had entered into an empowerment transaction that would be implemented with a new private equity fund, which would be managed via the Nampak-incubated private equity fund manager, Cambrian Capital Partners.

Nampak Intermediate Holdings — the sole shareholder of Nampak Products and the fund’s limited partner — has pledged to contribute up to R12.5m over the fund’s lifetime. It will also acquire cumulative, nonparticipating, nonconvertible, redeemable preference shares in Nampak Products, equal to its full market value.

CEO Phil Roux said the transaction, which was completed at end-November, was consistent with Nampak’s strategy based on strategic coherence and making a significant social impact.

He said Nampak believed Cambrian’s knowledge and experience would strengthen its competitive advantage and insight. The ownership structure would contribute to other broad-based BEE initiatives to improve JSE-listed Nampak’s
BBBEE contributor status.

“This transaction complements our BEE initiatives and also enables Nampak to improve its BEE standing,” said Roux. “We are partnering with a team that houses legal, corporate finance and financial markets experience to complement the diversity of the incumbent board.”

A wider range of commercial possibilities, improved reputation, increased competitiveness, funding and tax benefits, and the empowerment of black South Africans are among the benefits of being a BEE-compliant company with a high score.

Cambrian was founded by Bonakele and Ngcukaitobi. The former is MD and latter its non-executive chair.

They brought more than 40 years of experience in the regulatory, commercial, competition and legal fields, Nampak said.

Cambrian participates in high-impact economic sectors, including manufacturing, green energies and services, through direct participation and partnerships to create sustainable employment and enable rural communities to participate in the mainstream of the economy.

“The board of directors of Nampak believes that the transaction provides a unique opportunity to be a catalyst for the development and empowerment of SA BBBEE private equity opportunities,” it said.

Cambrian will be involved in managing the fund and building a capital base to support future empowerment investments and initiatives that would not have been feasible without this transaction.

Bonakele said the deal gave Cambrian exposure to Nampak, which it saw as a valuable manufacturing business “that resonates with us given its impact on industrialisation and jobs, topics that are close to our hearts”.

The MD said Cambrian would look to use the collaboration to further and intensify economic change, and raise Nampak’s shareholder value.

“Nampak presents a unique opportunity for broad-based black participation because of its location in the high job absorption sector of the economy, and its role as a premier manufacturer,” said Bonakele.

“So we will work to grow and create value for the business, and get returns of course, while making the kind of impact we desire for our country,” he said, adding the private equity structure also allowed for a wider variety of deals to be concluded.

“So we see this as a platform, a huge leg-up for us, and we are looking forward to making a mark in the SA business landscape,” he told Business Day.

The intragroup transaction will enable the fund to acquire Nampak Products’ ordinary shares at nominal value and without the need to raise acquisition funding and provide it with immediate ownership in the unit.

The fund will then subscribe for a 15% ordinary share interest in Nampak Products, while Nampak Intermediate Holdings will hold the remaining 85%.

Roux added that the transaction also brought Nampak a step closer to achieving its goal of becoming a premier metals packaging solutions partner in SA and Angola by complementing all the restructuring initiatives that had allowed it to optimise its portfolio and restore it to sustainable profitability.

The transaction does not require Nampak shareholder approval.

Nampak shares were down 1.48% to R406.02 on Thursday. They have surged 120% since the start of the year, giving it a market capitalisation of nearly R3.5bn on the JSE.

gumedemi@businesslive.co.za
mackenziej@arena.africa