Allan Gray now 20% black owned, soon to be 27%
Mr Allan Gray, founder of Allan Gray Limited and its offshore affiliate Orbis Investment Management Limited, today announced the implementation of the empowerment deal originally introduced in 2005, resulting in effective black ownership of just over 20% of Allan Gray Limited of which E2 is 18.9%. He also announced the imminent issue of further shares to a share ownership plan for black staff that will increase black ownership to over 27%.
"We are delighted to have brought to fruition our plans for broad-based Black Economic Empowerment just four weeks after the publication of the enabling DTI Codes. We applaud Governments intent and sensitivity in introducing these Codes of Good Practice on Broad Based Black Economic Empowerment which aim to benefit a large number of previously disadvantaged South Africans," said Mr Gray.
A broad-based ownership scheme, E2 has purchased 18,9% of Allan Gray Limited for R1,1 billion and will use the dividend flow to fund selected predominantly black entrepreneurs. Named by its Chairman Thando Mhlambiso and his co-Trustees Imogen Mkhize and Mahesh Cooper, E2 represents 'excellence in entrepreneurship'. E2's shareholding is represented on the Board of Allan Gray Limited by Ms Mkhize and Mr Mhlambiso. The Board is now comprised of 50% black people at both an executive and non-executive director level. None of the Trustees has any beneficial interest in E2.
The over-riding purpose of E2, as a long-term capital fund, is to foster excellence in entrepreneurship by providing subsidised financing to new business owners, who are graduates of the Allan Gray Fellowship Programme. Secondly, the Trust will also finance the activities of social entrepreneurs who are sought out by E2 and who demonstrate exceptional leadership and creative initiative. These selected entrepreneurs must also manifest attributes associated with successful business entrepreneurship, as applied to the activities of public benefit organisations, which achieve significant and sustainable social change. E2's principal initial focus will be on redeeming the debt it has raised from Standard Bank (with the assistance of a guarantee from Allan Gray Group Limited) in order to purchase its interest in Allan Gray Limited.
E2 has been mandated to ensure that not less than 90% of the total funding it extends is in support of black entrepreneurs and not less than 40% is in support of black women. This requirement exceeds the stipulation of the Codes that at least 85% of all benefits allocated by a broad-based ownership scheme must accrue to black people.
To quote directly from the E2 Trust Deed, the Founders "share a deep concern with regard to the prevalence of poverty and unemployment and wish to make a positive contribution by fostering new business enterprises by the provision of financial assistance, upon favourable terms, to facilitate new business entrepreneurship and also to make provision for the meaningful financial support of social entrepreneurship in South Africa, through financial support for other selected Public Benefit Activities."
According to E2s trustee, Thando Mhlambiso, "What is unique about what we at E2, Allan Gray and Orbis are doing is the integrated, long term approach, recognising the need for job creation in South Africa and the catalytic role played by entrepreneurship. Not only have Allan Gray and Orbis empowered E2 to finance primarily black South African business and social entrepreneurs, they have also seen the need to invest in educating aspiring entrepreneurs and equipping them with the skills and experience to start their own successful businesses through the Allan Gray Orbis Foundation." It is anticipated that this initiative will in due course provide scholarships and bursaries to approximately 500 university students, to be called fellows, at any one time.
Each fellowship is a fully funded scholarship at university covering tuition, board, lodging and subsistence. Graduates of the Allan Gray Fellowship Programme who wish to become entrepreneurs will be eligible to apply to E2 for funding, on favourable terms, for their new businesses.
"In fact", says Prof Jakes Gerwel, Chairman of the Allan Gray Orbis Foundation, now in its second year of operation, "recognising the urgent need for more black South Africans to do well at Mathematics and Science at the school level, we have recently resolved to extend our support and funding to enable promising pupils who would otherwise not have the means to attend old model C and private schools, the opportunity to do so."
Allan Gray Orbis Foundation is funded annually by the Allan Gray Group of Companies which have committed to donate at least 7% of their taxed profits in perpetuity representing, in its directors opinion, the firms best conceivable investment, namely in the education of young, predominantly black, South Africans. The Trustees of Allan Gray Orbis Foundation are Professor Jakes Gerwel, Futhi Mthoba and Mahesh Cooper.
The long-term nature of the Allan Gray Orbis Foundation's commitment is further secured by Mr Gray donating the R1.1 billion proceeds of the sale of his shares in Allan Gray Limited to E2 to the Allan Gray Orbis Foundation Africa Endowment. This Endowment will invest the proceeds for the long-term to reinforce support for the Allan Gray Orbis Foundation and related public benefit organisations. Allan Gray Limited also plans empowerment structures in Namibia, Swaziland and Botswana where it has operations and/or clients. Mr Gray will serve as a trustee and initial chairman of the Board of Trustees of the endowment, which appropriately includes Delphine Govender and Adam Karr, directors with senior investment responsibilities at Allan Gray and Orbis respectively, as well as Professor Jakes Gerwel, William Fairhead and Richard Rosenthal.
As a token of their appreciation for the outstanding contribution and loyalty of everyone at Allan Gray Limited, Gill and Allan Gray have undertaken to in future pay for the education at school and university level of children of Allan Gray Limited staff earning less than R250 000 per annum.
Allan Gray concluded: "Relative to their needs, this contribution is small, but it comes with the earnest desire to allow those South Africans less fortunate than ourselves to dream, if not for themselves then for their children, of realising through their own efforts and determination, their full potential irrespective of their financial circumstances. The sky is their limit as evidenced by the fact that the long established Allan Gray Orbis Fellowship at the Harvard Business School will fund the tuition and residence fees of any previously disadvantaged South African in financial need who gains admission to the two year full time MBA program."
