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Makwe Masilela from Nehawu Securities and Steven Hawes, the project manager for research and advisory at Empowerdex, say that the Sasol Inzalo share scheme is a very good offer for black investors.
Petrochemicals giant Sasol first announced its intention to do a black economic empowerment (BEE) transaction towards the end of last year, following harsh criticism from the Public Investment Corporation head, Brian Molefe, for its lack of transformation.
The oil company then announced the final terms of its R26bn BEE transaction in May this year, which has been hailed as the largest to date.
In terms of the deal, participants will acquire ownership of 10% of Sasol. About 3% of the 10% BEE stake will go to the general public, 1.5% to broad-based BEE groups and trade unions involved in Sasol's business, 4% to Sasol employees and finally 1.5% will go to the Sasol Inzalo Foundation.
In terms of the 3% public offering, Sasol has designed the deal to appeal to two kinds of investors. Firstly, there is the funded version, where small cash contributions are required from prospective investors. Then there is the cash option, where investors are expected to pay for the total value of the shares.
Funded version
The company is issuing up to 18.9 million unlisted Sasol Inzalo shares at R18.30 for the first 100 shares and R36.60 thereafter, subject to a minimum of 25 shares or R457.
If, for instance, you plan on purchasing 200 shares, you will pay R1 830 for the first 100 shares and then R3 660 for the next 100, making it a total payment of R5 490 for 200 shares.
No trading is allowed in the first three years. After the three years have lapsed, shares can only be sold to other black people or groups until the 10th year.
After 10 years, these shares will be listed on the JSE and the remaining debt will be settled through a sale of the shares on the open market and Inzalo shareholders will get the remaining Sasol shares.
No dividends will be paid for the first three years of the scheme. After the three-year period, only 5% of the dividend may be paid to Inzalo shareholders.
Cash version
As far as the second scheme is concerned, Sasol will sell up to 18.9 million unlisted Sasol BEE shares at R336, subject to a minimum of 10 shares or R3 666.
If you plan on purchasing 200 shares, expect to pay R67 200.
No trading is allowed in the first two years. After two years, the shares can only be sold to black people or groups. After 10 years, the BEE shares are converted into Sasol shares and will be listed on the JSE.
Sasol's ordinary share price was at R453.44 at the time of print, indicating that participants who go for the funded version will effectively only be paying about 4% to 8% of the value of these shares compared to the 20% discount you will get for paying cash for the shares.
The funded version seems to be the way to go.
"The funded version will cost you far less and allow you to spend your money on other investments," says Hawes.
Both analysts advise participants to hang on to the shares for the full 10 years.
"Generally when you invest in shares, you have to take a long-term view," advises Masilela.
The Sasol Inzalo public share offer opened on June 2 and will close on July 3 for the funded offer and July 5 for the cash share option.
- City Press
