<strong>By: Transformation Investment Portfolio (TIP) One</strong>

Shaking up South Africa’s investment landscape, the Transformation Investment Portfolio (TIP) One listed recently on the ZAR X stock exchange. This debut will enable investors to easily access the transformation investments asset class through a listed empowerment investment holding company that invests in B-BBEE schemes that own stakes in listed companies.

B-BBEE schemes have long been criticised for benefitting only a select few rather than driving real economic transformation and broad-based wealth creation. TIP One seeks to transform South African capital markets proactively by creating a more inclusive model for a wider range of investors to share in the benefits of these schemes. The company will therefore enable BEE scheme members to unlock the value of their assets, while also offering more South Africans the opportunity to invest and generate wealth, explains Dr Gil Mahlati, Chairman and founder of the African Financial Group, the firm that developed and is promoting TIP One’s listing on the ZAR X stock exchange.

“We believe that the launch of TIP One marks the start of a new era in South Africa’s transformation journey, allowing more South Africans to enjoy the advantages of B-BBEE schemes and create wealth, while simultaneously solving a few of the key issues plaguing B-BBEE scheme members and schemes,” Mahlati says.

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<h3><strong>Overcoming key challenges</strong></h3>

Challenges currently facing B-BBEE scheme members include a lack of liquidity owing to long lock-in periods, as well as a lack of diversification (heightening investment risk), and the inability to borrow against B-BBEE shares.

In response to these problems, TIP One aims to buy out B-BBEE scheme investors in exchange for either cash or shares in TIP One. Geoff Blount, TIP One CEO explains that scheme participants will then own TIP One shares, where they gain the advantage of owning a liquid, tradeable share, which represents ownership of a professionally managed, diversified basket of high-quality BEE assets across all market segments. While TIP One is ideally a long-term investment, TIP One shareholders are then able to sell these shares, as well as borrow against them.

Lemao Ditodi, TIP One Financial Director, notes that the company therefore provides a mechanism to facilitate unlocking value within BEE investments, in order to benefit the economy and mobilise existing black-owned capital.

“Many BEE investments are essentially sterilised on their owner’s balance sheet. By securitising these assets, we are able to unlock their value to their owners,” Ditodi explains.

<h3><strong>The benefit of listing on ZAR X</strong></h3>

The purchase of B-BBEE shares is made possible through TIP One’s own status as a permanent majority black-owned and controlled company. The company’s black credentials are guaranteed through unique trading rules, which together with ZAR X’s pre-trade compliance systems and shareholder registry, ensure that it is always at least 51% black owned. TIP One therefore offers B-BBEE schemes themselves additional value through its status as a permanent black investor which is able to assume all the rights and obligations that the original investor had with the scheme.

TIP One’s ZAR X listing further ensures that trading costs are kept to a minimum, while ZAR X’s Mobi App opens greater investment access to a broad scope of retail investors from all walks of life, in keeping with TIP One’s ethos of promoting economic transformation and financial inclusion.

“The ZAR X operating environment was specifically designed to create liquidity in BEE structures, which drives financial inclusion and access for all. We are very excited to be listing TIP One which speaks directly to this ethos,” adds Etienne Nel, CEO of ZAR X.