For a small company, Sekunjalo Investments thinks big on matters related to black economic empowerment (BEE). It has been on the road to recovery since the collapse of LeisureNet in 2000 - then its largest investment. There are still some outstanding claims from that fiasco, which led to a loss of R180m. But it has forged ahead, building its business back to what it once was.
It's been a tough few years for the company. When LeisureNet collapsed, Sekunjalo suddenly found banks and creditors withdrawing their support. It had to sell some valuable assets to keep afloat. Now, says CEO Iqbal Survè, the company is back in expansionary mode - a string of recent purchases illustrates this. With a market capitalisation of just more than R150m, Sekunjalo's share price has bounced back.
Throughout its recovery phase, its commitment to building a nonracial, black empowered company has been as strong as when it first opened its doors in 1997. It aims to be responsive to the needs of all stakeholders, including government, employees, civil society, communities and shareholders.
"Sekunjalo is recognised by its peers in the business community as a company that is leading the implementation of the social contract between various stakeholders in the country," says Survè, with his characteristic philosopher-businessman style. "The transformative business model applied by Sekunjalo in its subsidiaries has been researched as a case study of successful BEE."
Survè says that Sekunjalo should lead the empowerment community with a new economic model that has three principles as its basic foundation.
The first principle, he says, is that the business community must provide solutions, services and products that are affordable yet commercially viable. "The objective of such a principle is to make available to the broader population products that are affordable and accessible," says Survè.
The second principle, he says, is that the underlying businesses must enter into partnerships with established businesses and communities to provide a combined solution and service to the consumer.
"This principle draws on the experience of the corporate and the unique knowledge of the community participants to provide a service that is suited to the needs of the consumer," says Survè.
The third principle is that every business venture must be based on the development economic model, which allows for the improvement of the stakeholders in the business and the consumer.
"This principle ensures the skilful development of the entrepreneur and the education of the consumer. Through this economic model, Sekunjalo remains at the forefront of BEE and transformation in the country."
The transformative business model has attracted a number of significant partners to Sekunjalo and allowed it to enter into value-creating acquisitions and partnerships in the past financial year.
Sekunjalo has, among other things, secured full control of Premier Fishing, where - despite the stronger rand hampering exports - cash flows are reassuring. In a classic case of its philosophy in action, Sekunjalo originally lost money in Premier Fishing by refusing to play some of the common games of the industry - manipulating fishing quotas and playing to the whims of fishing inspectors. But a commitment to cleaning up the industry ridded the industry of criminal elements.
The trick for Sekunjalo, though, was to re-establish deal flow after successfully concluding an R80m rights issue - a deal that led to influential empowerment investor Futuregrowth emerging as a strategic shareholder.
Having invigorated itself and made a few acquisitions when no-one was giving it a chance, the investment holding company was preparing to announce two more significant acquisitions as Top Empowerment Companies (TEC) was going to press.
According to the Empowerdex ranking, Sekunjalo is the winner overall in the diversified industrials sector - a place it also held last year. In the Top 185 table it came seventh, despite improving on the score that gave it second place last year - other companies made bigger improvements and overtook it in the rankings.
In the past few years, Sekunjalo management has propelled itself from a moribund state to being SA's leader of "meaningful" empowerment. It does not take minority passive investments - something it learnt from the LeisureNet experience - instead it takes large influential stakes that allow it to actively direct the course of a business.
Sekunjalo was the brainchild of former political activists who saw political power elude them. Survè and his colleagues decided to kick-start economic empowerment in the Western Cape , where there had been little BEE activity.
Sekunjalo was formed from a capital base of R250 000 invested by a consortium of former political activists, professionals, informal savings groups and black business people.
Survè volunteered to set up the company, a role that was initially to last six months before a permanent CEO was appointed. That was seven years ago, and he is still there.
Chairman Wallace Mgoqi says the awards (such as its second place in last year's TEC) and the general performance of the company are recognition by the business community of the influence that Sekunjalo's business model has on BEE.
Survè says empowerment should not only be about the transfer of wealth from white to black, but about creating space for those who were disadvantaged in the past.
"We invest in providing skills for black people and put more emphasis on eradicating poverty," says Survè.
