Hotels & leisure is a small sector as far as the number of companies is concerned but its market capitalisation has been growing strongly in recent years, helped by the outstanding performance of gaming companies such as Sun International, Peermont and Gold Reef.
A contributing factor to the growth in market capitalisation of the sector has been the exponential growth in the share prices of fast food companies Famous Brands and Spur Corporation.
These groups have been beneficiaries of low interest rates and buoyant spending. It's likely that this trend will continue for the foreseeable future, in the absence of any extraneous factors.
The Don Group has a clear overall lead and is reported on separately. Interestingly, though The Don is intuitively regarded as the company with the highest black equity percentage in the sector, three other companies have higher percentages - Peermont, Phumelela and Sun International.
Phumelela Gaming & Leisure is the pre-eminent horse-racing company in the country and its achievements in respect of BEE have been significant.
During the 2004/2005 financial year the National Gambling Board conducted an audit of BEE in the gambling industry. In the process, Phumelela was required to make submissions, including a presentation to the BEE audit committee, and it was complimented on its achievements.
BEE groups have a direct equity stake in the group of 27,5%, and appoint three nonexecutive directors to the board. The major portion of loans raised to finance this purchase has been paid.
Peermont Global, like all other local gaming companies, has been significantly empowered for a long time, both at regional and corporate levels.
Its BEE shareholding may increase significantly in future if the proposed buyout by the Mineworkers' Investment Company (MIC) goes through. Towards the end of 2006, MIC - a broad-based BEE company - announced it was leading a consortium that had made a firm offer to acquire all the issued share capital of Peermont in a transaction arranged by Brait SA. The offer is to acquire all the issued ordinary share capital of Peermont for R12,90/share in a transaction valued at R7bn. This offer is probably the largest BEE public-to-private transaction to date in SA.
Sun International made a bid of R5,90 each for all of Real Africa Holdings' (RAH) shares last year, to tidy up the minority interest in some of its casinos.
Comair entered into a BEE transaction with an empowerment consortium led by Thelo Aviation Investments, a wholly owned subsidiary of Thelo Group. City Lodge announced that the group had embarked on a formal process to introduce significant BEE ownership.
