Brimstone Investments, the winner in the financial services sector, is not a signatory to the financial sector charter (FSC), but its black economic ownership of 57% secured it top honours.
It listed on the investment companies sector of the JSE Securities Exchange in 1998 and is one of the few empowerment successes to emerge from the Western Cape. It is at the forefront of empowerment in the province. The company, led by co-CEOs Mustaq Brey and Fred Robertson, was the first Cape-based empowerment company to list after it was formed in 1994.
Brimstone, along with other small-cap companies, has had a difficult time over the past 10 years. But its determination and commitment to the core tenets of its business ensured that it became one of SA's black empowerment success stories.
Its core investments are in Lenco, House of Monatic and Sea Harvest and financial services companies Lion of Africa and Aon SA. The company moved into financial services because the strong rand called for a balanced portfolio.
Brey says Brimstone remains a company with its roots firmly in the community, which may be the reason it came fifth overall in the FM's Top Empowerment Companies survey.
"We want to continue to be profitable and empowering and have a positive social effect," says Brey. "We also believe in strong partnerships and favour holding investments over the long term."
The three core industrial operations are being run according to the principles of empowerment. "We have grown these companies, creating jobs and wealth. We live the life of empowerment," says Brey.
"We want shareholders to participate in the companies we invest in because we intend to empower shareholders."
Throughout 2003, the group's success was underpinned by its focus on partnerships. The group focused on deal flow and a number of headline generating deals were concluded. These included the acquisition of a 25% interest in Lenco and a doubling of its stake in Sea Harvest to 21,5%.
At the time of going to press, the Afrox Heathcare (Ahealth) deal - which will involve parent company African Oxygen (Afrox) selling its subsidiary to black empowerment consortium Bidco - had not been finalised, but Brey has told the FM that the deal will be concluded in February.
When the initial announcement of the proposed deal was made, Ahealth was to be sold in full and the R3,5bn deal was to be one of the largest in SA, as well as the largest in the private-hospital industry.
However, the competition commission was concerned about Bidco partner Medi-Clinic's proposed 25% equity investment in Ahealth, which it competes with.
As a result, Medi-Clinic decided to pull out of Bidco and its 25% stake was purchased by Afrox, which now effectively replaces Medi-Clinic in the consortium.
"We do not believe in buying out companies. We prefer turnarounds and greenfield projects," says Brey.
Commenting on talk that big empowerment deals are being struck by the same influential individuals, Brey says there needs to a balance between the "champions" and broad-based empowerment stakeholders. He believes that the champions can use the expertise they have gained from striking big deals.
"If you leave the whole thing to broad-based empowerment, big companies would move quickly and exploit the people who are supposed to benefit from the deal. This would not be good for the broad-based strategy," says Brey.
Brimstone remains committed to evaluating its investments and ensuring they yield positive results.
It will also continue to create wealth for shareholders and the communities in which it operates.
