Johannesburg - Black investors have the opportunity to acquire good assets on the JSE - if they can find willing funders and executives who are not sufficiently distracted by the shrinking credit and slowing global economy.
"It may well be a stock-pickers market out there. There is no knowing whether the markets have bottomed out yet but I would suggest it is about the right time for BEE entities to buy fairly cheap into good, listed companies," says Andile Tlhoaele, the new chairperson of the Association of BEE Verification Agencies (Abva).
"The development finance institutions such as the National Empowerment Fund (NEF) and the Industrial Development Corporation must look to jump in and assist black companies to acquire equity in non-empowered companies."
South African stocks across the board have come down sharply, weighed down by the global financial turmoil that has left world markets spiralling downwards.
Lauren Czepek, business development manager at the JSE, agrees that this is an opportune time to snatch bargains. "This is also a time for good BEE companies with capital requirements to start talking to the JSE in readiness for a listing on AltX when the market turns.
"Relative to the JSE's all-share index, AltX is a less volatile board because its index composition is less exposed to the swings seen in the international markets," says Czepek.
She says the JSE will be hosting a BEE Showcase on Tuesday and Wednesday for a select group of BEE consortiums.
"There are opportunities to buy into a few listed companies whose BEE shareholding has been diluted by recent corporate activity."
Czepek says share prices of AltX companies have also come down significantly in recent months although some have pleasingly maintained their levels or even risen.
Tread with caution
"During these times we continue to advocate the benefits of a well thought-out listing as part of a strategic growth plan which includes capital raising requirements to fund expansion.
"BEEs and private equity players may also see opportunities. For companies with strong fundamentals and compelling earnings potential, it is a case of riding out the present market storm," Czepek says.
Independent corporate finance adviser Victor Mavuso says black investors should tread with caution. "Nobody is certain that the market slide has reached the bottom. Individuals looking to explore the stock markets will do well to talk to stockbrokers.
"I also do not think it a good idea to lock up development funding institutions' (DFIs) money in equities and to hope for the best. It's highly risky in this current environment. The money will be better used financing SMMEs."
Mavuso is not enthusiastic about DFIs such as the NEF acquiring and temporarily warehousing shares for on-selling to new BEE shareholders.
But some experts believe that BEE deal-making is likely to be put on the back burner as "worried" business executives channel energies to shoring up companies hit by economic conditions.
"In the current market conditions BEE will not be high up the order of priorities," says independent corporate finance adviser Victor Mabuza.
"I expect deal activity to slow to a trickle at least until the market erosion has bottomed out."
Plunging stock prices, the result of a massive sell-off triggered by the global financial turmoil, has written off millions in values of black shareholding at the JSE.
"Many BEE transactions premised on share values which a few months ago were said to be 'good deals' are now in serious distress," said Mabuza.
The crisis has already sunk the R122m BEE deal between Mvelaphanda Holdings and construction company Afrimat announced in July.
- City Press