The challenge
Vodacom needed to preserve their BEE ownership level. This process required the unwinding of an implemented BEE transaction from 2008 and the implementation of the new BEE transaction. This transaction needed to provide significant liquidity and a return of capital to Vodacom SA BEE shareholders without paying out the full net value realised, while lowering the cost of facilitating the BEE transaction. BEE shareholders also needed to receive exposure to the Vodacom Group’s South African and international operations.
The RMB Solution
RMB successfully unwinded the Vodacom SA BEE transaction and delivered approximately R7.12-bn of value – 6.4 times the original capital BEE shareholders invested into in the 2008 transaction. Off the back of this, existing BEE shareholders reinvested R3.86-bn of the value realised from the previous deal into the new transaction. This was a significant recommitment of black capital and indicated a strong vote of confidence from existing BEE shareholders in achieving further growth from investing in Vodacom.
An upfront special dividend of R3.26-bn was paid to BEE shareholders, amounting to 2.9 times the original capital invested into the 2008 deal. This liquidity event was an important feature for the transaction to ensure Vodacom’s BEE shareholders received a substantial upfront liquidity event, which enhanced the trading and marketability of YeboYethu shares. This transaction also did not impose any restriction on YeboYethu investors being able to continue to trade their shares from the outset of the transaction.
Client Benefits
The 10-year funding term of the new BEE transaction enabled Vodacom to include YeboYethu as a BEE investor until September 2028. This funding was raised at a blended rate of 69% of prime – one of the cheapest funding packages achieved for any BEE transaction.
This new BEE transaction ensured shareholders would receive value for the life of the transaction through a guaranteed trickle dividend that was engineered within the structure, and would be paid when Vodacom Group paid dividends.
Vodacom’s effective BEE ownership increased from 17% to 20%. YeboYethu provided the perfect platform for Vodacom to maintain and potentially enhance its BEE ownership in the future as regulations require. Furthermore, Vodacom SA shareholders were elevated to the Vodacom Group, providing them with exposure to Vodacom Group’s South African and international operations – something few BEE transactions have been able to accomplish.
| Client | Vodacom |
|---|---|
| Deal value | R16.4-bn |
| Sector | Telecommunication and Technology |
| Expertise | BEE advisory, funding |
| RMB’s Role | Financial adviser, mandated lead arranger, co-Funder |
