Kunene Bros is one of the country's legendary BEE companies. It began operating in 1978, when Fortune Kunene, the father of the five brothers who now run the company, opened a milk distribution company in Vosloorus on the East Rand.
The company later expanded into liquor distribution.
Few of the country's black entrepreneurs who found a way to start thriving businesses in the face of the maze of apartheid-era restrictions made the successful transition into post-1994 BEE deal-making.
The pioneering black entrepreneurs who managed to benefit from the apartheid-era regulations included Sam Motsuenyane, Archie Nkonyeni, Richard and Marina Maponya, Ephraim Tshabalala, Peter Motale, Habakuk Shikwane and Bishop Barnabus Lekganyane.
The road to riches, by township standards, for a black person under apartheid was to secure a distribution licence from a big retailer or local authority, which gave a monopoly in a particular area.
The few entrepreneurs who made the transition from this survivalist entrepreneurial mode to post-1994 deal-making included Shikwane, Jabu Mabuza of Tsogo Sun, Herman Mashaba of Black Like Me and the Kunene brothers.
In 1983 Kunene Bros entered the big league when it won a tender to take over a milk outlet that had previously been owned by government. The milk outlet started selling Coca-Cola products.
The business grew rapidly and wholesale outlets were established in Vosloorus, KwaThema and Katlehong. The company also established three liquor outlets on the East Rand.
At the dawn of the new democracy, Kunene Bros had become the largest distributor of Coca-Cola products in SA.
The legacy business has now been consolidated under the banner of Fortune Beverages, in which Kunene Finance Company (KFC) has a 36,5% shareholding. The business, which was delisted in 2002, continues to generate significant earnings for Kunene Bros Holdings (KBH), which was formed in 1994 to take advantage of the opportunities that would open up in the postapartheid era.
Over the past decade, Kunene Bros has expanded into defence, electronics and telecoms , financial services and motor dealerships. The five brothers (Zoli, Keith, Dudu, Zanosi and Menzi) own equal shares in the company and are involved in the company's operations.
The company structure now includes KFC, a subsidiary of KBH, which has Old Mutual, Sanlam, Nedcor and Future Growth as institutional investors, who own 49,9% of the equity.
Until recently KFC had a 33% stake in Grintek, a listed company, with a market capitalisation of about R400m and 1 300 employees, most of them highly skilled technicians and engineers. KBH's shareholding in Grintek was worth about R65m.
The company has been through torrid times recently on the back of a contracting local defence market.
Recently Swedish Group Saab bought a 21% stake in the company for about R100m in a transaction that reduced KFC's stake in the company to 25%. The proceeds from the sale will be used to retire debt incurred by KFC when it purchased the stake.
The plan is for Grintek to delist from the JSE and for the company to have only two shareholders, Saab and KFC. The latest transaction places Grintek in a good position to expand internationally.
KFC also owns 6,3% of Glenrand MIB, a listed company in the insurance sector, with market capitalisation of about R870m. The value of KBH's shareholding in Glenrand is about R55m.
Lastly, Kunene Industrial Holdings, which is 75% owned by KFC, has a 40% stake in McCarthy Kunene Motors, an Mpumalanga-based Mercedes-Benz dealership.
The first 10 years of postapartheid BEE deal-making have been a hard slog for KBH, and the returns in defence and insurance have not been spectacular when compared with the legacy business.
But the company has made a successful transition to the postapartheid BEE deal-making environment. KBH's solid entrepreneurial roots and focus could result in rich pickings in the years ahead.
