Momentum Metropolitan to strengthen its B-BBEE ownership
The company has launched an inclusive share ownership scheme that will benefit its SA employees.
Momentum Metropolitan has announced a proposed transaction to strengthen its B-BBEE ownership and retain its competitive empowerment rating, a business imperative.
The company aims to achieve this through an inclusive employee share ownership scheme that will benefit all permanent South African-based employees. “This transaction is in line with the company’s inclusive and authentic approach to ownership and transformation, and includes all races,” the statement read.
The scheme will apply rules aligned to the Financial Sector Codes and B-BBEE Amendment Act. For this reason, black employees (including Indian and coloured employees) who currently constitute 78 percent of the group’s employee base, will receive at least 85 percent of the economic benefits from the scheme. Black women employees will receive 55 percent of the economic benefits from the scheme.
The scheme will benefit people from various income groups, while honouring its entrepreneurial spirit by giving employees the opportunity to be co-owners of the business. It will be available to all current, permanent employees, as well as future employees over the next five years and will constitute three percent of the issued ordinary share capital of Momentum Metropolitan Holdings, which would result in approximately 44.9 million shares being acquired for employees.
This transaction costs the group 10 percent of the full transaction value, since 90 percent of the transaction is funded with debt, which will be serviced and repaid through dividends and share growth. Staff therefore benefit from the 10 percent discount, and the extent to which the total shareholder return exceeds the cost of the debt.
The statement reads: “Momentum Metropolitan embraces the authentic advancement of inclusive economic transformation and the meaningful participation of black people. The transaction supports the group in further enhancing its B-BBEE objectives through more representative ownership. The group’s focus on broad-based empowerment through employees aligns with its growth strategy. The pursuit of economic transformation has become an important business requirement and becomes even more important in enabling sustainable new business opportunities and growth. This inclusive transaction will therefore contribute to value creation for all the group’s stakeholders including shareholders, clients, financial advisers and employees.”
Approval and implementation of the scheme is subject to 75 percent shareholder approval. A vote on this will be taken at the group's general meeting to be held in November 2020.