NEF chair tipped for Sasfin deal

National Empowerment Fund (NEF) chairman Rakesh Garach appears to be a frontrunner in the impending black empowerment deal with niche bank Sasfin.

Last week, Garach confirmed that he had held discussions with banking group Sasfin Holdings about the BEE deal.

Though people close to the deal suggested that the state-owned NEF may play some role in the financing structure of the deal, Garach said this week that the NEF "has nothing to do with it".

Roland Sassoon, Sasfin's CEO, also confirmed this week that Garach was "one of the interested parties" that his company has been in talks with.

Sassoon said his group has a narrow list of parties it is talking to. "It is progressing nicely" he said.

Quite how the deal will be financed remains unclear.

Contacted this week, the state-owned Public Investment Corporation said that "at the moment, the PIC is not involved in this deal".

Sassoon said Sasfin was in "a sensitive stage of its prospective BEE deal", so he couldn't comment on any of the specifics.

"We can, however, confirm that all activity related to our potential deal will not compromise any legal, regulatory or ethical requirements and will have the approval of all legal and regulatory parties," he said.

While the bank has not put a value on any deal, the Financial Sector Charter said banks should aim for 10% direct ownership by black individuals, and another 15% in "indirect ownership".

Based on Sasfin's market value of R1.8-billion, a 10% stake would be worth R180-million to any empowerment consortium.

The NEF stirred controversy two years ago when it offered Ndalo Luxury Ventures owner Khanyi Dhlomo a R34-million loan to open a luxury designer store, Luminance, in Hyde Park, Johannesburg.

Shortly after the fuss this caused, the NEF said it had run out of money to fund other entrepreneurs.

Sassoon said Sasfin was ripe for a BEE transaction, "but we haven't yet finalised the deal ... the idea is, whoever the party will be, we'd like them to have skin in the game. That's an important factor."

Sassoon said a lot of BEE deals have come unstuck because they relied entirely on debt financing - and the danger of those deals is that when their share price falls, the deal goes under.

"We are being very careful on who we negotiate with. There are obviously a lot of fly-by-nights out there," Sassoon said.

Garach is a former founding member of Utajiri Investments, a BEE group that bought 25% of Deutsche Bank in 2010, so it could be said he has a "lot of skin in the game".

Besides being an independent nonexecutive director of Pacific Wildcat Resources Corp, he was also a director of the Johnny Copelyn-led Hosken Consolidated Investments from 2008 to 2012.

Sassoon expects the BEE transaction to be concluded within three months.