A black economic empowerment (BEE) consortium, led by Dr Enos Banda, will take a 25% stake in the fleet management division of Altech Netstar, says JSE-listed Altech.
The deal with Nariku sees the diversified ICT company retreat from last year's announcement that the stake would reach 30%.
The company announced the BEE transaction to shareholders late yesterday afternoon, but did not disclose the value, or the reason for lowering the stake.
In September, Altech CEO Craig Venter said an agreement, in principle, had been reached for BEE parties to acquire an aggregate 30% interest in Altech Netstar's fleet management division. At that time, the company envisaged the consortium would comprise a private empowerment company and a trust for the benefit of the company's previously-disadvantaged employees.
At the same time, the company revealed Banda owned 56.6% of the private empowerment company.
At one time interim chairman of the second national operator, Banda left power utility Eskom in 2004 amid controversy surrounding his use of the company's credit card. However, both Eskom and Banda denied his departure was linked to any financial dealings.
Banda went on to head the investment and corporate banking division of HSBC's South African and sub-Saharan operations. He has served as a non-executive director on Altech's board since February 2006.
Drop in stake, not value
This morning, Banda said the consortium was not disappointed at the drop in the shareholding.
"The value of the shareholding has remained constant and that is more important. We do not wish to over-extend ourselves, or limit our ability to participate in other opportunities," he explains.
The deal, as it stands, also allows much of the risk to rest on Altech's shoulders, adds Banda. With a fair portion of the deal receiving vendor financing, with an option for Nariku to re-finance, the performance of the new company will rest heavily on Altech, he notes.
New company
According to yesterday's statement, a new company, Altech Netstar Fleet Management Services, has been established to purchase the fleet management division from Altech Netstar, and to operate the business.
Nariku will hold 25% plus one share of this company, while Altech will retain the remaining share. Additionally, Altech Netstar will receive royalties from the new company for the use of the intellectual property developed for fleet management.
"Altech Netstar has invested a great deal in research and development resources over many years developing our fleet management technology," said Venter yesterday.
As for the consortium, Banda says Netstar's fleet management business has significant opportunity for growth, while Netstar has reached a mature level in its market penetration.
"Netstar is a market leader in vehicle tracking and tracing; there is not much value we could have added to the business. The fleet management division is a different story. It's in its early stages and with our involvement has the potential to deliver high growth rates."
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