A leading community-based investment company
![Click to go home [logo]](http://www.bafokengholdings.com/i/logo.png){kind=logo}
[Charlotte Mathews] Royal Bafokeng Holdings (RBH), the investment company that houses the assets of the 300 000-strong Royal Bafokeng Nation, is likely to participate in more consolidation activity because of the size of its portfolio and the maturity of SA’s mining sector.
RBH CEO Niall Carroll said in an interview this week the RBH portfolio was worth about R24bn-R25bn. Given that size, a black empowerment deal worth R200m to R300m was not enough to diversify the portfolio, and RBH was looking for larger transactions.
At the same time, other black empowerment companies were looking at the limits of natural growth and hoping to pool resources and constituencies. The Bafokeng were not obsessed with control, but would like to be regarded as good partners.
The primary purpose of RBH is to invest to generate income to fund the nation’s development. The Bafokeng’s land holdings were included in the former Bophuthatswana homeland. As they had an acrimonious relationship with former homeland leader Lucas Mangope, there was historically little investment in the area. In the 1990s, the nation fought, and won, a lengthy legal process to secure royalties from mining companies operating on the land, which contains rich reserves of platinum.
The nation has devised a 30-year strategy, called the master plan, which identifies economic opportunities and development needs for the 1 200km˛ of land it owns, covering infrastructure, manufacturing, tourism, housing and schooling. The land is not occupied exclusively by Bafokeng as there are many non-Bafokeng working on mines in the area. They will also benefit from the development plan.
RBH’s biggest single investment is its 13,4% stake in Impala Platinum, worth about R15bn at current prices. It also holds 32,1% of ferrochrome producer Merafe Resources and 50% of the Bafokeng Rasimone mine, with Anglo Platinum holding the other 50%. Resources make up about 85% of the value of the portfolio.
In the industrial sector, it has stakes in Astrapak, Metair and food group Liberty Star Consumer. The services sector investments include stakes in Senwes, DHL Express SA, Fraser Alexander and MB Technologies, where it is making an offer to buy out minority shareholders. It also has a financial sector investment in the form of 10% of SA Eagle.
Carroll said although RBH’s strategy was to reduce its dependence on a single sector, it did not want to spread its investments too widely to become a proxy for the market. Its main objective was to generate stable and growing yields for its shareholders to fund social projects, but it was able to take a reasonably long-term view on an investment.
If another good platinum opportunity arose, RBH would consider it, but its bias was away from further investments in mining, Carroll said. It could also raise its stake in Implats, if it felt the value was there.
The Bafokeng was looking mainly at South African investments because it could find better deals at better prices under the black empowerment dynamic, Carroll said. The Bafokeng could access bigger-sized investments in high-quality assets than would be available to passive asset managers and they could negotiate deals using gearing and discounts not available to other asset managers. “At the moment in SA we can buy at wholesale prices, while offshore and other institutional investors buy at retail prices,” Carroll said.
Despite their size and substantial investment portfolio, Carroll said the Bafokeng could hardly be regarded as “the usual suspects”, black companies regularly participating in high-quality transactions. The Bafokeng were 300 000 people, and he said it was clear where the money was being spent: on R2bn of physical infrastructure, health and education that should have been provided by the former homeland or national government.
