The financial services giant also has a community share scheme and an employee share scheme, and is issuing just more than 205 million shares – most of which will go to black South Africans. The bump-up in the company’s BEE ownership score is about 4%, and the implementation of Bula Tsela will take it to just under 33% black ownership.

Bula Tsela means “pave the way” in Sesotho. Black, coloured and Indian applicants can apply for a minimum of 200 retail scheme shares at a total subscription price of R2,000, payable upfront as a lump sum. Ten-percent of the retail part of the scheme will be set aside for applicants who cannot afford to pay the R2,000 upfront – they can apply for a maximum of 100 retail scheme shares at a total subscription price of R1,000, paying only R100 upfront, with the remainder payable over a 12-month period. 

Taskeen Ismail, head of corporate finance at Old Mutual, says applicants will have to decide on their own which offer they want to take up – either the R2,000 upfront or R1,000 paid over 12 months. 

Old Mutual cannot, however, guarantee that all applicants will be awarded the retail scheme shares that they apply for. Allocations will be decided at the end of the two-month application period, based on the number of shares available and the number of applicants. 

Ismail says there will be a weighting in favour of black women. A number of queries on the morning the offer opened were from parents and grandparents wanting to invest on behalf of their minor children and grandchildren. To do this, you will need an unabridged birth certificate of the minor and documentation to prove that both the minor and one parent are either black, coloured or Indian.

“There’s so much facilitation in the deal that if you invest in the R2,000 bucket, that’s only 15% of the value of what you’re getting, and we match whatever you put down with a cash donation on our side. The other 70% is preference share funding,” Ismail says. 

So, the retail scheme wants to buy about 63 million Old Mutual shares at R800-million. R120-million comes from participants, R120-million comes from Old Mutual itself as a donation or contribution, and the remaining R560-million is preference share funding from Old Mutual, which will have to be paid back – which is why there is a lock-in period.

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“The only reason you would go for the R1,000 offer is if you don’t have enough money to put down upfront. We are leaving it to customers to use their own discretion, as it is very difficult for us to test affordability. However, this is also why we have left the window open for a two-month period, encompassing two salary dates,” says Ismail. 

Although you can apply to invest any amount via the scheme, Old Mutual will wait until the closing date of 24 October before allocating shares to all the applicants. 

Ismail says the company is cognisant that consumers are struggling as the economy goes through a downturn, hence the long window to allow wider participation as many may not have R2,000 freely available. 

“We want to be fair to get as many participants as possible. So, for example, rather than giving someone who applies for R50,000 worth of shares the full number of shares they applied for, we might give them R10,000 worth of shares, opening up R40,000 for 20 more applicants.” 

Applicants can apply for shares via www.singularfs.co.za or www.oldmutual.com/bula-tsela or call 087 015 0395.

Applicants who are awarded shares will start earning dividends from January next year, but will not be able to trade the shares as they will be locked in for five years. They will also not be able to reinvest dividends for the five-year period. 

After five years, the shares will be listed on an exchange, such as the JSE BEE exchange, so that the shares remain with a BEE participant. Old Mutual has not committed to any particular exchange yet.

“Through this Old Mutual Bula Tsela Retail Scheme, we will give our people the opportunity to become indirect owners of the company they love and trust. Apart from the many benefits for those who invest, this scheme also ensures we can accelerate our own broad-based black economic empowerment ownership (BBBEE) targets to exceed 30% black ownership,” says Iain Williamson, chief executive of Old Mutual.

“The reality is that consumers are stretched, but many are looking for ways to save or invest for the medium to long term. It’s very important for South Africans to understand that they can invest small amounts consistently to create savings for themselves – one does not need hundreds of thousands of rands to start your savings journey.”

This transaction follows the more than R7.9-billion of value created when Old Mutual’s 2005 BBBEE deal matured in 2015. Other broad-based transformation initiatives the company is driving include:

• The Imfundo Trust: Old Mutual Investment Group’s scholarship initiative that aims to provide funding for disadvantaged students with a particular interest in the investments industry.
• Customised funding solutions to black-owned small businesses, either for asset finance, working capital, or both, through the Masisizane Fund.
• The successful conclusion of the sale of a 21% stake in Futuregrowth Asset Management to African Women Chartered Accountants Investment Holdings to increase the pool of black women chartered accountants in South Africa while growing black ownership in the financial services sector.

“Since moving our primary listing, we have acted fast to realign and cement our business objectives. Transformation is a key component of our strategy, and we want to keep playing a significant role in driving growth and transformation broadly,” said Williamson.

“Now, we’re inviting our key stakeholders to join us as we work to ‘open the way’ and make a real, sustainable difference to their lives and livelihoods through this share scheme.” BM/DM