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Absa Implements Landmark B-BBEE Transaction

Tinashe Mupasiri



Johannesburg, South Africa – September 1, 2023 – Absa Group Limited (“Absa”) today announced that its proposed Broad-Based Black Economic Empowerment (B-BBEE) and staff incentivisation transaction has become unconditional and was implemented on September 1, 2023.

A new corporate logo stands above the entrance to the Absa Group Ltd. headquarters office in Johannesburg, South Africa, on Tuesday, Aug. 7, 2018. Barclays Africa Group Ltd. has ditched the name to revert to Absa Group Ltd. as it severs ties with Barclays Plc, after the London-based company sold down the controlling stake it bought in 2005. Photographer: Waldo Swiegers/Bloomberg via Getty Images

The transaction involved the issuance of 46,626,228 new Absa ordinary shares to Newshelf 1405 (RF) Proprietary Limited at an issue price of R178.11 per share. The new shares will be treated as treasury shares for accounting purposes.

Following the transaction, Absa’s share capital comprises an authorised share capital of 950,000,000 ordinary shares of R2.00 each and an issued share capital of 894,376,907 ordinary shares of R2.00 each.

The transaction is a significant milestone in Absa’s commitment to black economic empowerment. It will increase black ownership of Absa to above the 25% threshold as set out in the Financial Sector Charter, and will also benefit a broad range of black South Africans through a corporate social investment trust.

Absa CEO, Mr. Arnold Rautenbach, said: “We are delighted to have implemented this landmark transaction, which is a major step forward in our commitment to black economic empowerment. We believe that this transaction will create a more inclusive and sustainable economy for all South Africans.”

Mr. Arnold Rautenbach – CEO of Absa Group Limited

The transaction also includes a cash-settled phantom share staff incentivisation scheme for staff of Absa group companies outside South Africa. Engagement with the affected entities is substantially complete and all participating companies will implement the schemes with effect from September 1, 2023.

This is a significant development for Absa and its employees, and it is a positive step towards a more inclusive and equitable South African economy.

Comments on the impact of the transaction

  1. B-BBEE Transaction Overview: Highlighting Absa Group Limited’s successful implementation of a B-BBEE and staff incentivization transaction, the transaction involved the issuance of a substantial number of new ordinary shares to Newshelf 1405 (RF) Proprietary Limited, a move aimed at achieving greater black ownership within the company. It’s important to note that B-BBEE transactions are a key mechanism in South Africa for promoting economic transformation by increasing black participation in various sectors of the economy.
  2. Compliance with B-BBEE Requirements: The transaction signifies Absa’s commitment to meeting B-BBEE requirements, particularly the Financial Sector Charter’s 25% black ownership threshold. Companies that do not meet these requirements often face various challenges, including limited access to government contracts, reduced market competitiveness, and reputational risks. By successfully implementing this transaction, Absa is taking a proactive approach to addressing these issues and positioning itself as a more compliant and inclusive organization.
  3. Corporate Social Investment: The transaction will benefit a broad range of black South Africans through a corporate social investment trust. This demonstrates Absa’s broader commitment to social responsibility and community development. Companies that engage in B-BBEE transactions not only aim to meet regulatory requirements but also seek to contribute positively to the communities they serve, which can enhance their brand reputation and social impact.
  4. Leadership and Commitment: The statement from Absa’s CEO, Mr. Arnold Rautenbach underscores the organization’s dedication to black economic empowerment and creating a more inclusive and sustainable economy for all South Africans. Leadership commitment is a critical factor in the success of B-BBEE initiatives, as it sets the tone for organizational culture and strategy.
  5. International Component: The cash-settled phantom share staff incentivization scheme for staff of Absa group companies outside South Africa, is an international component reflecting a commitment to extending the benefits of B-BBEE initiatives beyond South Africa’s borders. It’s a forward-thinking approach that can help Absa attract and retain talent among its global workforce.

Absa’s successful implementation of this B-BBEE transaction is a notable milestone in its journey towards compliance with B-BBEE requirements. It showcases the organization’s commitment to transformation, black economic empowerment, and corporate social responsibility. Companies that have not met these requirements may find themselves at a competitive disadvantage, making it crucial for them to explore similar initiatives to align with South Africa’s transformation agenda and promote a more inclusive economy.

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