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Johannesburg - Vele Investments has paid R300 million for a company whose subsidiary is accused of failing to account for more than R220 million belonging to the descendants of mine workers.
A businessman in the pension funds sector said buying Mvunonala Holdings was not a bad idea, but only if the company’s clients did not withdraw.
“If all clients take their business elsewhere, like they are rumoured to be doing, then Vele is buying an empty shell and I don’t know why they would do that.”
Three months ago, two fund managers withdrew at least R200 million they had asked Mvunonala Asset Managers to invest on their behalf.
This followed a City Press report in May that the Bophelo Beneficiary Fund (BBF), which is administered by Bophelo Benefit Services (BBS), could not account for over R220 million.
In its financials, the R220 million was listed as “investment properties”. City Press established that the fund did not own these properties.
Vele Investments chairman, Tshifhiwa Matodzi, told City Press that Vele had done due diligence on the transaction.
They were happy to pay R300 million and to take whatever risk that came with the deal.
Matodzi, a chartered accountant, and Venda King Toni Mphephu Ramabulana founded Vele Investments two years ago.
“We had to pay R300 million as soon as possible to recapitalise the business and ensure it is solvent,” Matodzi told City Press.
“We had to do that to make sure the beneficiaries continue getting what is due to them on a month-to-month basis without any trouble. The day-to-day running of the business is now back on track.”
The transaction, he said, was subject to approval by competition authorities.
Mvunonala’s CEO, Angel Nyathela, said at the moment her focus would be on stabilising the business and ensuring beneficiaries continued receiving their money.
“At a later stage we will probably rebrand the business and give it a new lease of life.”
Mvunonala’s assets include Bophelo Life, which offers a variety of short-term and long-term insurance products; and Mvunonala Asset Managers, which manages over R8 billion on behalf of the Public Investment Corporation.
Mvunonala Holdings also owns Bophelo Benefit Services (BBS), which specialises in the administration of trust and beneficiary funds.
In May, City Press reported that the BBF had allegedly cooked its books.
The BBS administers the BBF on behalf more than 7 200 beneficiaries whose guardians belong to the Amplats Group Provident Fund.
Following City Press’ stories, the Financial Services Board placed both the BBS and BBF under curatorship.
While the curator has not finished his work, two senior sources at Mvunonala and Vele said that, according to anecdotal evidence, at least R500 million is missing from the fund.
Mpumi Sithole, an Anglo American Platinum spokesperson, said: “Our primary concern is that the interests of the beneficiaries are protected and that they receive the payments due to them. We support the actions and the proposals that the curator has taken and made to ensure this happens.”
Nyathela said she was relieved by Vele’s decision.
“The previous shareholder ran into problems. We are excited and relieved that the current shareholder has the capacity to recapitalise the business.
Vele is not a new player in the financial services sector. It is a major shareholder in VBS Mutual Bank.
In July, City Press reported that the bank was preparing to apply for a commercial banking licence.
VBS Bank lent President Jacob Zuma R7.8 million to reimburse the state for non-security upgrades to his private home in Nkandla.
Vele owns 51% of the Insure Group. Matodzi said they were the market leaders in insurance premium collection, taking in about R1.9 billion every month.
The acquisition of Mvunonala would give Vele a strong presence in the financial service sector, Matodzi said.
“We are now in banking, insurance and asset management, and that is our strategy. We are very strong in insurance. We collect more than half of all short-term insurance premiums in the country.”
The group also owns 55% of Anglo African Finance, a financier of wine and fruit farmers in the Western Cape.
The remaining shares in the company are owned, among others, by banking baron GT Ferreira. Matodzi said the group owns some 32 companies, with a total value of R22 billion.
While there were many black investment companies, Vele was “truly” black, by blacks and for blacks.
“While we will acquire companies and grow them organically, our main strategy is to acquire existing companies and build from there.
We also want to show that black people can run banks and companies in the financial services sector.
Many people think that blacks are only good at tendering for government construction work.”
This week, Vele announced that its company, Malibongwe Petroleum, has been named as one of Burgan Cape Terminal’s anchor tenants.
The terminal receives fuel by sea, stores it and distributes it by road. It is Cape Town’s first independent oil storage and distribution facility.
“Malibongwe is one of the anchor tenants. We have storage space for about 300 million litres of fuel per month, which amounts to about 33% storage space in the entire facility.”
Some of the biggest companies in the Vele stable include Wegezi, Hlomphanang Logistics, Allcare Administrators and Sizwe Asset Finance.
They have interests in medical aid administration, manufacturing and repairing of electrical motors, student accommodation and SMME finance.
Matodzi said the company would soon announce agricultural deals in the US, Kuwait and Saudi Arabia.
