Construction group Stefanutti Stocks has come to the JSE to teach old hands how to play the black economic empowerment (BEE) game.
Stefanutti, which debuted on the JSE in August 2007, has emerged from 2008 as the BEE leader in the construction sector of the JSE, beating giants such as Aveng, Murray & Roberts (M&R), Group Five and Wilson Bayly Holmes Ovcon (WBHO). This is according to data in the FM's 2009 Top Empowerment Companies (TEC) survey. The figures researched by leading BEE rating agency Empowerdex show Stefanutti achieving a total BEE score of 65,3%. It is remarkable that Stefanutti has been able to maintain fair BEE credentials when it has been engaged in a high-speed growth plan. Growth and expansion are often used by corporations to dodge BEE.
Since listing two years ago, Stefanutti has grown its revenue base by more than 100% to about R5bn - as expected in the year ended February. Stefanutti has shown an insatiable appetite for acquisitions. It concluded three acquisitions in 2007. These brought in mining services company ECMP, followed by the acquisition of majority stakes in mechanical and electrical construction company Skelton & Plummer and marine construction specialist Civil & Coastal.
In 2008 Stefanutti concluded a blockbuster transaction by acquiring construction group Stocks for about R1,1bn. This transaction catapulted Stefanutti into the first-tier construction league.
Prior to the acquisition of Stocks, Stefanutti had direct black ownership of about 11%. This came from a partnership with midsized BEE player Mowana Investments, which is led by former ANC MP Nkenke Kekana. Stocks brought into the Stefanutti fold its BEE partnership with Leswikeng Building, which is led by prominent black businessman Herman Mashaba. The acquisition produced direct black ownership of about 18%.
In the TEC data, Stefanutti got 18,89 points out of 20 in the ownership element of the broad-based BEE scorecard. Economic interest and voting rights came in at 25,1%, which equals the 10-year target set in the BEE codes of good practice. The ownership record is complemented by the representation of black people at board level. Stefanutti's seven-member board features three black faces. These are former Transnet MD Mafika Mkhwanazi, founding member of Wiphold Nomhle Canca and the executive chairman of Mowana Investments Bridgman Sithole.
Stefanutti still has some way to go when it comes to black representation at management level. It managed to claim 3,1 points for the management element. The group's skills development initiatives are fair and it earned 7,1 points for its efforts out of a possible 15. It has a decent preferential procurement record, which earned it 14,1 points out of a possible 20. Preferential procurement spend came in at 42% of the group's discretionary spend.
The group claimed all 15 points for enterprise development, which seems to be the favourite for the construction industry. Five other construction companies - Aveng, Group Five, WBHO, M&R and Omnia - captured in the TEC data scored 100% in this element. This is largely because of the joint ventures with emerging contractors, a requirement when these companies bid for public-sector work.
As a result, all the mainstream construction players have concluded BEE deals. Aveng did its deal in 2005 in which it transferred 25% of its local operations to a BEE consortium led by Tiso Group. Aveng, which includes Grinaker-LTA, claims all points in the ownership element of the BEE scorecard plus all bonus points - giving it a total of 23 points. Aveng's total BEE score in the TEC survey came at 64,1%, marginally lower than Stefanutti's 65,3%. Aveng is then followed by Group Five with a total BEE score of 60,7%. WBHO is placed fourth followed by M&R, Omnia, Distribution & Warehousing Network, Raubex Group, Pretoria Portland Cement Company and Protech Khuthele.
