Thebe Investment Co was one of the country's first black economic empowerment (BEE) companies. Yet in this case the early bird has missed most of the tasty BEE morsels that have been on offer, particularly of late.
Established in 1993 with money some say came from ANC connections, Thebe seems to have been beaten by relatively new BEE formations like Saki Macozoma's Safika, Tokyo Sexwale's Mvelaphanda and Cyril Ramaphosa's Shanduka to win stakes in recent high-profile BEE deals .
Even more recently formed companies like Andile Ngcaba's Ngcaba Holdings and Sandile Zungu's Zico seem to have achieved more than Thebe.
The last time Thebe concluded a notable BEE transaction was back in 2001, when it took 25% in the downstream marketing division of Shell SA.
What happened? Thebe emerged from the market crash of the late 1990s battered and bruised, humbled and more cautious. Having concluded a number of deals in the mid-1990s, Thebe must have lost close to 90% of its investments between 1998 and 2000.
The group's portfolio reflected a huge bias towards listed assets, which went up in flames amid the Asian emerging markets crisis. Listed subsidiaries and associate companies were badly hurt, including Thebe Financial Services, FCB Fidelity and Macmed, the latter two being two of the largest liquidations in recent SA corporate history. Amid the turmoil, the group suffered a skills flight as many of its employees left for more comfortable zones.
At that point, the group went back to the drawing board, to emerge with a new definition of its business and empowerment, says chairman and MD Vusi Khanyile, who has headed Thebe from day one. "We decided we no longer wanted to be just an investment holding company," says Khanyile. "Instead we decided to take on much closer operational involvement."
That strategy does not promote buying into mature businesses, which has become the norm in BEE transactions. Instead, says Khanyile, "it requires an entrepreneurial flair of identifying a gap in the market and going for it with zeal. We start most of our businesses from scratch and grow them. This is not a headline-catching area but we know that we are in line for a huge return on our capital," he adds .
As a result, he says, Thebe's net asset value grew by about 800% between 2001 and now . "For me, this approach allows for the unshackling of black enterprises and greater job creation," he says.
"Seven years ago, we spent endless hours in an attempt to enter the tourism industry and we walked away from buying a 10% stake in an existing tourism company," says Khanyile. "Finally we employed one person to start the business, which has since grown to employ more than 200 people in Johannesburg, Cape Town and Botswana."
With tourism, Thebe could not have gone wrong. The sector has grown strongly, accounting for about 6% of the country's economy at present.
Thebe Tourism Group is divided into three entities: inbound tourism, retailing and services. The inbound tourism division is focused on international tour planning, conferencing and events and includes brands such as Ker & Downey and UTC. The retail division comprises outdoor retailer Cape Union Mart, Batsumi Airport Adventures and Perry's Bridge, while the services division offers car hire and boat tours and has an interest in leading SA heritage destinations, like the soon-to-be launched Cradle of Humankind centre.
Tourism is one of the three pillars that define the Thebe of today. The others are financial services and strategic investments; the latter includes the Shell holding and interests in Tusk Resorts and Kaya FM.
The financial services interests are by far the largest in the group and have been grouped under financial solutions, insurance and health care.
The financial solutions arm has, in line with Thebe's philosophy, been strengthened by start-ups and small enterprises with growth potential, including Thebe Employee Benefits, advisory firm Thebe Yomnotho, credit risk solutions group Creditworx, and Thebe Securities. The health-care division includes two distribution companies focusing on pharmaceutical products and medical and surgical equipment.
On the insurance side are Thebe Risk Services, formerly Hosken, and Safrican, which serves the lower-income market.
These operations give Thebe an employee base of about 3 000 people. "That makes us a real business, not just an accounting entity," says Khanyile .
Should Thebe decide to take its assets to the market once more, it is likely to have better luck. It won't just be bringing debt-laden paper.
Khanyile is mum on the subject. That will be the decision of Thebe's mysterious shareholders, he says. More than 70% of Thebe's equity is held by a trust called Batho Batho, defined by Thebe as a representative of community development entities. A combined 26% is held by Old Mutual, Sanlam and Investec.
A similar veil of secrecy hangs over Thebe's financial results, which Khanyile refuses to disclose. With this approach he is unlikely even to get to the JSE's starting block.
