Black economic empowerment isn't something Sun International could take a gamble on. The hotel and casino company had to meet strict empowerment requirements to win new casino licences in SA. It also needed to ensure ownership not only at holding company level, but at subsidiary level too.
In this year's Top Empowerment Companies survey, the R11bn cap company's overall empowerment score increased from 52% in 2007 to 67,5%, helping it to secure first place in the hotel and leisure sector's rankings, up from fourth place last year.
The group has a complex black economic empowerment structure. Because of the BEE ownership requirements of casino licence bidding processes, more than 10 BEE consortia have a stake in Sun International at some level.
At group level, the Dinokana consortium - headed by Lereko Investments - owns 8% of Sun International after concluding a R392m deal in 2006. The Sun International Employee Share Trust, a trust formed for the benefit of the company's employees, excluding senior managers, owns 3% of the holding company and 43% of Dinokana.
At casino level, empowerment partners have different stakes in each operation. These range from a 15% stake in some casinos to as much as 37%. Community trusts in almost all provinces also mean the ownership structure is particularly broad-based.
"Having board meetings with directors at every level does absorb large amounts of management time and adds complexity," says Sun International chief financial officer Rob Becker. "But in such a highly regulated sector as gaming, having relationships with provincial and government regulators is critical."
He says that is one area where BEE partners can bring significant value to the business.
Sun International's effective empowerment ownership is now at 35% and Becker says the group plans to increase this.
"At the time of the bidding for licences, many of our empowerment partners didn't have the means to acquire their full stake in the business," he says. "We facilitated their participation by granting them options to take up shares at a later stage."
Sun International also performed well on its procurement score, despite many of its supplies - such as gaming equipment - being imported.
According to its 2007 annual report, the group has exceeded its targets for 2004, 2005 and 2006, coming in at 33%, 42% and 46% respectively.
"We've had a number of big capital projects where we used local BEE businesses to help with refurbishment and development," says Becker.
The development projects have also had a knock-on effect on enterprise development, for which the company scored full points.
"During the construction phase we helped develop and mentor many small businesses in everything from gardening to catering," says group manager for transformation and change Azia Nxumalo.
But the challenge for the group will be to continue to initiate new business development programmes.
At executive level the company has three black directors - Kele Mazwai, Khati Mokhobo and Clarence Benjamin.
The Sun International Limited board includes Lulu Gwagwa, Louisa Majela, Valli Moosa and Hassen Adams.
