Chartered accountant and founder of Anchor Capital, Peter Armitage, who owns $1.55-million worth of shares in his company, was born in a caravan park in Boksburg, Johannesburg. At the age of seven, his family moved out of the trailer park to Durban where he studied and took on a part-time job to pay his fees, earning $13 a shift as a rugby reporter for a newspaper.
Armitage returned to Johannesburg with a degree to work as an analyst for Deutsche Bank. Soon he became South Africa’s top-rated analyst. He received 21 number one ratings for seven years and was named analyst of the year
in 1999.
“When you are 30 years old and you get that, you can’t be more chuffed with life,” says Armitage.
His skill with numbers and words helped.
“It doesn’t mean I was the smartest analyst; in every industry there is a game to be played. You’ve got to know how to do numbers but you also have to know how to write, I was very good at writing the reports,” says Armitage.
After five years at Deutsche Bank, Armitage made what he calls the biggest mistake in his career; moving to Merrill Lynch.
“I was the number one analyst and Merrill Lynch offered me a big fat pay check. And when you move for money, it’s usually not the right thing,” says Armitage.
It didn’t work. After just one year at Merrill Lynch, Armitage left for the best time of his life. He ran Africam, a live 24-hour website that enables people all over the world to watch video feeds from the African bush. He was brought on board largely to help list the business in London. Africam was the 17th biggest site in the world during the 2000s and would have listed at $250 million on the NASDAQ.
“The NASDAQ crashed and I had to go back and get a real job. It was a great adventure,” he says.
Armitage gave up wildlife and headed for Nedbank. The bank did not do asset management, something that Armitage wanted, so he left for Investec. He worked as the Chief Investment Officer at Investec Wealth for seven years. He still wasn’t satisfied.
“The internet thing frustrated me; I always wanted to be an entrepreneur but I didn’t pull it off. I needed to get back there,” says Armitage.
In 2012, Armitage founded Anchor Capital. He took a shell and turned it into a company that employs over 70 people.
“At [the age of] 30 you do it and you haven’t got the experience. This time around, I was 42 when we started so I had a bit more life experience; you’re not going in and then shocked that you lost something. You know what’s coming; you have a better idea of how hard you have to work and what you have to do,” says Armitage.
Anchor Capital raised $5.1 million in its listing on the JSE’s Alternative Exchange.
“We listed because we are ambitious and we want to go places. In two and half years, we’ve gotten into the top 30 of about 150 unit trust companies, we have leap-frogged all the guys who have been around forever. But we want to be in the top 10, not in the top 30. Our business is all about people, the listed business is a room with our brand wrapped around it. I wanted everyone who helped us build this business to have ownership in this business, every single person in the room has shares or share options. Our driver is worth $13,309 now,” says Armitage.
When the company listed in September, Piet Viljoen from RECM wasn’t too impressed.
“As a stock it is massively overpriced, a very small portion of the company is floated so it is tightly held and there is too much hype around it.”
Anthony Clark, Financial &amp; Industrial Small &amp; Medium Market Cap Analyst from Vunani Securities, described Armitage as colorful but astute and continues to see good growth ahead in Anchor Capital’s share price.
Armitage spends time away from the office looking for shares and new ways to make money. His passion for his business also has a dash of humor; he says his biggest motivation is a Kentucky Fried Chicken rounder. But his appetite for business is much stronger.
“We’re hungry and we enjoy it. I think it is just in your blood. In my last year or two at Investec, I was coming home at 5 o‘clock. I had a cosy job. When you get to your forties, your true soul and character gets tested. A lot of people have worked themselves up to seniority, getting paid more money than they need and just cruise. That was me, then my wife said to me, ‘this is not you. In the 12 years we’ve been married, you don’t seem to have any passion.’ And that’s when I realized I am an entrepreneur; I need to do this myself,” says Armitage.
Despite losing his first marriage by working too hard and losing quite a bit of money at Africam, Armitage is now happily married with children.
“You have to differentiate your business and your family. On the family side, I want to be a great father and husband. From a business point of view, I want to be remembered for creating a very special business.”

‘Our Driver Is Worth $13,309 Now’

It was a move to South Africa and the boredom of being an employee that spurred Asher Bohbot to head what is today a $1.4-billion information and communications technology company, Enterprise Outsourcing Holdings, popularly known as EOH.
Born in Morocco, the 61-year-old chief executive moved to South Africa at the age of 27.
He had been living in Israel at the time when a friend suggested they travel to South Africa for two weeks.
“I asked what is South Africa. I didn’t know about South Africa at the time. I came, but he didn’t come. He dropped me at the last minute. I knew nothing about the place [Johannesburg]; that two weeks turned into longer than that,” he says.
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“I behaved for the first week or so as a tourist in Johannesburg. I took a bus down to a museum and there I saw this girl who shared a flat with me in Israel. I didn’t know she was here.”
They took the bus to her home where Bohbot met her husband. A few minutes later a friend of theirs came to visit. He said he came from Israel to recruit industrial engineers for his business. Bohbot went for the interview and decided he’d work there for a short while. He worked at Laminate Industries (later to be part of the PG Group) as an industrial engineering manager in 1981 and started moving up the ranks, becoming General Manager and later Executive Director of Distribution of the main board of PG Bison.
Throughout his career, he was exposed to general business leadership, business systems and supply chain logistics, but the work became unfulfilling and boring for a man in his late twenties. He had had an affinity to system processes and this spurred Bohbot to start something from scratch.
The business idea came at 3AM one morning. He drew a picture charting how he thought this company would work. That drawing lies in his offices in Bedfordview, just outside Johannesburg. At the time, he wanted his business to bridge the gap in the information technology sector. EOH has stuck to its foundation.
But Bohbot doesn’t see himself as the classical entrepreneur, especially since he worked for the same company for 17 years before starting EOH.
“I don’t believe entrepreneurs reside only as little start-up guys working from a garage. Entrepreneurs exist within a company where they can influence capacity, to do things greater than an individual or entrepreneur can make on life or society,” he says.
“The notion that a corporate is anti-entrepreneurship is wrong. It’s the culture and nature of the business that dictates it. But we somehow take it that the corporate is the opposite of entrepreneurship.”
This chief executive says that EOH tries to embrace both. He says it’s worked so far and he believes it will similarly work like that in the future.
“Entrepreneurship, in our definition, is the ability to have one head and one brain that manages demand and supply.”
EOH is a firm with offices in cities in South Africa as well as 30 other locations across the continent. The business provides consulting technology and outsources solutions from the continent and Britain, operating in infrastructure, software and services segments.
His first client was his employer at the time, PG Bison, and 17 years later they remain so.
The business is one of the largest IT firms in the country and is set on growing. It listed on Africa’s biggest bourse, the Johannesburg Stock Exchange in 1998. At the time, the listing was done to create more awareness rather than making money. Today, EOH is a $1.4-billion company with revenues around $610 million, and employing over 8,000 people. The company is making good progress in expanding elsewhere in Africa and now has a presence in 29 countries. Its success can be attributed to its winning formula for acquisitions which has been carefully structured.
“We want to grow, be bigger and we want to develop. The bigger we are, the more influence we will have and also have a positive impact on our environment. Growth is paramount for us,” he says.
In 2014, Bohbot was named Business Leader of the Year at CNBC Africa’s All Africa Business Leadership Awards (ABLAA’s) for his success and bold contribution to solutions-based business and IT strategies. Over the years he has also won numerous awards which he says are merely recognition for the work EOH does.
Had Bohbot not gone to the museum, he could have boarded a different bus and led a different life.

The Bus That Led To  A Billion-Dollar Business

Some say it walks like a drunken Velociraptor, tail out and claws curled against its chest. Others think it looks like a scaly anteater. Most ask what on earth is it? This is the little known and misunderstood pangolin, a disappearing mammal seen rarely in the African wild, even by game rangers. Its scarcity gives it a high price on the black market; so much so it faces extinction faster than the rhino. The pangolin can end up as a soup – $300 a bowl – or is used in traditional medicine in Africa and Asia.
“The best description I have come across is a pangolin looks like an artichoke with armor. It comes from the cretaceous era. Its tongue is so long it curls in its belly. It has no teeth and has powerful front claws. In Africa alone, we estimate an excess of 10,000 a year are traded. It is the most illegally traded mammal in the world,” says Ray Jansen, a professor at the University of Tshwane and Vice-Chair of the African Pangolin Working Group.
The 80-million-year-old mammals can eat 200,000 ants and termites a day and are so elusive it’s almost impossible to say exactly how many of them are out there. Jansen’s rough estimate is that there could be anywhere between 37,000 and 44,000 in Southern Africa alone. All eight varieties of this ancient species (three in Asia; one in India and four in Africa) have been flagged on the International Union for Conservation of Nature (IUCN) Red List. The issue, fears Jansen, is that because so little is known about the pangolin, blocking the illegal trade is hard.
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“In April 2014, six tons of pangolin scales were confiscated in China. The amount when put into perspective is frightening; it is the equivalent of 2 million pangolins. It’s such a fascinating animal and as the awareness has grown so has the mapping of the illegal trade. We had cases where until recently; officials in America were confiscating scales thinking they were from a tortoise. The demand from the Asian market is also new. The pangolin in Asia have virtually been hunted to extinction, you can expect to pay $300 dollars for pangolin soups. So now we are expecting the demand to gravitate toward Africa,” says Jansen.
The tall wiry Jansen is every inch a professor. It’s harder to find a pangolin than his office, which is tucked away on the fourth floor of the University of Tshwane’s Pretoria campus. When you do find him, he is buried under a mountain of paperwork and animal skeletons. Jansen is no stranger to animals. He grew up hunting guinea fowl on the open school grounds of St Stithians Boys College, in Johannesburg, before moving to Port Elizabeth to complete a PhD in ornithology. He is also a trained falconer, was part of the dog tracker unit in the army and was a teacher.
Jansen took up the plight of the pangolin in June 2011. It was the day he held a mother pangolin and her dead pup, curled in her pouch, on the verge of being smuggled out of the country.
“To hold that small dead pup in your hands and see for the first time what these fascinating creatures look like. It was so emotional. But you have to move that emotion and anger into something else; I knew at that moment that I had to do something. You could say this pup essentially started the whole project.”
The university called on his skills as an expert in genetic mapping to do more research.
“It was the first mammal work I had ever done, but I found it was fascinating. The pangolin was a mystery to the scientific world. There had been no real data on its genetics or proven scientific research on its habits. We were the pioneers. It was the first time I was seeing a baby. We wanted to take the body back to the bio-bank in Pretoria to analyze its genetics. At the time no one knew what the physiology of a pangolin even was,” says Jansen.
Months later, Jansen released the mother of the dead pup in a game reserve in the Waterberg.
On this summer’s day, Jansen is ecstatic, virtually jumping with joy. He’d just heard of a pangolin rescue by Jen Guyton, a conservationist, in the Gorongosa National Park in Mozambique. One more mother and its baby safely returned to the wild. He digs into his drawers and pulls out his cell phone.
“This is an example of the problem we were facing,” he says handing over the phone.
On the phone is a screengrab of an advert for a pangolin for sale on Alibaba, the $231-billion Chinese e-commerce company; a lesson that the pangolin is never far from the consumers mind. Jansen removed the advert.
Since 2011, Jansen has breathed life into the topic. His efforts have caught the ear of the famous.
“The pangolin runs the risk of becoming extinct before most people have even heard of them,” says Prince William, Duke of Cambridge, who lent his voice in a video blog campaign against wildlife trafficking in November.
Closer to home, South African-born Nicky Oppenheimer, whose family is worth $6.8 billion and is the third richest man in Africa, according to Forbes, has thrown his weight behind the cause. His philanthropic interest is in finding a solution to the largest killer of pangolins in South Africa – electrified game fences.
“Pangolins walk on their hind feet so when they make contact with the lower wire it’s at their belly height. They then curl instinctively around the wire. In the end they are pulsed to death,” says Jansen.
Along with the poachers, electricity could kill off the pangolin before the next sale on Alibaba.
“What is a pangolin? The research we did revealed that the pangolin is most closely related to a cat. It’s not even on the same genetics as an armadillo,” says Jansen.
Jansen and Oppenheimer hope the pangolin, like the cat, will have nine lives.

The Shy Scaly Animal That Could  Curl Up And Die

Imagine if the next time you needed to toss together a salad, spice up a meal or garnish an after-dinner treat, you only went as far as your balcony, rooftop or garden to source the ingredients. If you are a city-dweller in sub-Saharan Africa, that is more possible than you think.
Urban farming is mushrooming on the continent, almost as quickly as the rate at which people are moving into cities. Around 40% of the African population (around 375 million people) are metropolitan residents and that number will grow to 60% by 2050. The Food and Agriculture Organization of the United Nations (FAO) estimates that 150 million of those people grow their own food.
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A handful of them are hipsters who nurture herb gardens while practising yoga and preaching about organic eating and low carbon footprints. Hundreds of thousands more are after more than just a feel-good factor. Just as urban farming became part of the recovery after the First World War and is being used by Cubans to combat crippling sanctions, in Africa it is solving some of society’s most severe problems. Sub-Saharan Africa is the world’s most under-nourished region and is rife with hunger and unemployment.
The FAO cited Malawi, Cameroon and Ghana, where up to 50% of households have vegetable gardens, as three countries with successful urban farming programs. South Africa is not far behind, with steps being taken to encourage urban farming in a country where around 20% of the population does not know where their next meal is coming from.
“Urban agriculture projects strive to reduce food security and create economic upliftment. Growing food in the backyard of your shack can be the difference between going hungry and having a healthy meal on the table for your family,” says Catherine Nicks, the Project Manager of Tyisa Nabanye, a non-profit urban agriculture organization which runs a farm on the slopes of Signal Hill in Cape Town.
Tyisa Nabanye occupies land on ERF 81, one of the original sites of agriculture in the Cape that dates back to the 1700s. Although it is historically farmland, these days it is not an ideal place to grow crops. While the clay soil remains nutrient rich, the area is often lashed by heavy rains and strong winds which destroy a harvest overnight. But Nicks and a team of seven others have found a way of working with the elements instead of fighting them through an ideology of permaculture.
“We practice companion planting in our garden, where certain vegetables are planted together with certain herbs and play different roles. Some plants feed or fix nutrients in the soil, others repel or attract insects that perform specific functions,” says Nicks.
“We find that kale and spinach do well in our garden, partly because they need little attention and they grow year round. And partly because they sell well, people cannot get enough of the very limited kale in the city.”
Kale is the new ‘it’ food and is often used in green juice where it is blended with spinach, cucumber and apple to create a healthy brew. One-Juice, a company that specializes in selling these drinks, buys some of its kale directly from Tyisa Nabanye. By doing that, they have created a direct connection between customers that are conscious of where their food comes from and the producers who supply that food.
People who drink One-Juice’s products only have to ask where the raw materials come from to be directed to Tyisa Nabanye. There they are welcome to see for themselves how the crops are grown. Nicks meets many of them personally, answers questions, introduces them to the gardeners and invites them to
come back.
“Urban farming is largely about reducing the distance between farm and fork, about increasing ones understanding about where our food comes from. We now know the name of our farmer as well as our doctor,” says Nicks.
“It’s about knowing what a gooseberry looks like before it has been dehusked, washed and placed on a layer of bubble wrap in a plastic container, what the leaf of a watermelon plant looks like and how tall a tomato plant can grow. We use our garden to share our knowledge about where our food comes from and how we can be more sustainable.”
But it’s not as simple as that. The 8.2–hectares, of which Tyisa Nabanye does not even occupy a tenth, is owned by the South African National Defence Force and run by the Department of Public Works. The farm does not have a lease to operate and there are constant bureaucratic battles to overcome, despite a policy in place which promotes urban farming.
In June 2007, the City of Cape Town drafted an urban agriculture policy in which stated its vision to create a ‘prosperous and growing urban agriculture sector,’ which would center on poverty alleviation and job creation. By encouraging agriculture in the city, the government hoped to take steps to increase food security and provide people with a sustainable income source.
More than five years after the document was tabled, the city reached an agreement with the Oranjezicht City Farm (OZCF) to turn a disused bowling green into a bowl of greens, literally. The farm uses that phrase as its slogan now. It was the city’s first pop-culture urban farm and quickly captured the attention of Capetonians because it was promoted as a community space.
OZCF connected itself to locals through a weekly market which sold fresh vegetables grown on the farm and grew to include a variety other stalls. It became the place to be on a Saturday morning for socializing, sipping on fair-trade coffee or craft beer or even trying a hand at farming as one of the OZCF volunteers. But the quaintness did not last.
The farm is situated on a heritage site and city officials require certain safety requirements to be met to accommodate the foot traffic and a proper market licence to trade. In early December, news broke that the market would stop until those boxes were ticked and the young and beautiful were outraged. They had grown to think of OZCF as a public property and exerted enough pressure to move the market to the official residence of the province’s Premier, Helen Zille, from where it continues to operate from.
The fracas over OZCF remains unresolved but it achieved something the community wanted most; it created awareness. Residents cared enough about where their food was coming from to go to where it was being grown. They watch it flower and flourish, buy it unwashed and unpackaged, cook it themselves, eat it and share it with others. If that sentiment lasts, urban farming will continue growing in Africa and could become as commercially viable as it in Beijing, where half the vegetables consumed in the city are in grown in urban farms.
With that in mind, go on and grow
a little.

Farming Coming  To A Town Near You

If South Africans had more electricity, they could see him on TV. Chris Yelland, the electrical engineer turned energy journalist entrepreneur, is the scourge of Eskom, South Africa’s nationalized power utility. His voice is critical, outspoken and more consistent than the electricity supply from Eskom.
“When I started Energize magazine [1997], a lot of doomsayers said to me ‘what the hell do you want to start a new magazine for?’ they also said ‘what more can you say before you run out of hot stories?’. Energy at that time was a boring subject. There was not a lot of interest. People just assumed when you switched on the plug and flicked the switch, electricity would come out the wall. Fortunately for us, and by chance, energy has become a hot topic. It actually affects everybody. Not just industry, not just commerce, but the man or woman in the street. We’ve had to learn that behind the plug lies a multi-billion-rand industry,” says Yelland.
Yelland has had a lot to talk about over the last 10 years. Eskom has the capacity to provide 41,194 megawatts (MW). Its aging fleet of power stations, many built 30 years ago, runs at 33,000MW, and cannot match the current demands of 38,000MW.
For many years South Africans have been smug towards electricity. A common joke told locally was: What did Zimbabweans use before candles? Electricity. Now, that joke, and the smugness, has come home to roost.
The short term solution is ‘load shedding’; in English, this means scheduled power cuts. They are words that mean shops close, mines shut down and computer nerds cringe at losing their unsaved data. According to Yelland, load shedding is a vicious circle; as the power utility pleads with the country to use less energy, it hampers its operations.
“Electricity consumption at this moment is at a seven-year low. Ever since 2008, [when load shedding first was implemented], it’s been going down. This means Eskom’s sales are going down. Their revenue is going down but their costs are going up. In the last six months of 2014, Eskom declared a profit of R9.3 billion (around $800 million), but that was over the winter period, when their prices are nearly double the summer period because demand for electricity is high. In the second six months of 2015, their projected profit is going to see a loss of R9 billion ($780 million). It’s going to wipe out the entire profit for the first six months of the year. Why? “Because they haven’t got enough electricity to sell. They are throttling the economy telling people to use less,” says Yelland.
A four-year delay in coal power plant projects Medupi and Kusile has made matters worse. The projects which were due to be completed in 2013 and 2014 were expected to bring around 10,000MW to alleviate the grid. The delays mean their price tags, estimated at R69.1 billion ($6 billion) and R80.6 billion ($7 billion) in 2007, have now nearly doubled to R154.2 billion ($13.3 billion) and R172.2 billion ($14.9 billion). Alone, they amount to an annual loss of R30 billion ($2.6 billion) in electricity sales.
“All 12 units will be online by 2020 at the earliest, if nothing further goes wrong. They are not a short term solution to South Africa’s needs,” says Yelland.
The power crisis has also meant Eskom spends around R1 billion ($86.7 billion) on diesel every month to run open-cycle gas turbines. Ironically, the country doesn’t have the infrastructure to run on gas, which the turbines are designed for and which would be a cheaper, cleaner alternative to diesel, says Yelland.
There is light in the gloom. A thousand megawatts is generated by renewable energy projects, built by private companies and then sold back to Eskom at set tariffs.
“The success stories are not government success stories, they are private: private capital; private technology; built, owned and operated privately; and then generated into the grid,” says Yelland.
What’s more, a study by the Council for Scientific and Industrial Research (CSIR) in South Africa, found that the cost of the renewable energy projects was less than the cost of the blackouts, and didn’t cost the tax payer a cent.
“In fact, it’s contributed towards reducing costs, meaning we had to spend less on diesel. Of course that’s only valid on shortages like the wave we have had at the moment. If we weren’t using diesel, if it was a normal country with a surplus of energy, [renewables] would cost us,” says Yelland.
Renewables do have a downside and are not the solution to Eskom’s crisis. The sun and wind are not constant. At any given time the 1,000MW of energy supplied will most likely produce 250MW.
“This is rated output, that is what is expected when the sun is blowing full blast and when the wind is blowing full ball. For every 100MW of renewable energy of capacity, you have to build an equal amount of conventional, mid-merit plants, to back up and provide power when the wind is not blowing or the sun is not shining. If you are trying to deliver 100MW and the sun goes behind a cloud, you can’t just switch off half of your customers,” says Yelland.
In the short term, Eskom’s crisis is further threatened by a R3-billion ($260 million) bailout to enable it to purchase diesel for the next month. Yelland believes Eskom needs to restructure.
“Eskom’s structure is the same structure as when it was set up 80 years ago. The world has changed since then. Other organizations like Sasol are not state-owned enterprises any longer. I believe if Eskom took on strategic equity partners, and listed on the stock exchange, it would raise significant capital resources without the need to raise tariffs. We need to inject new blood into something that is currently something akin to that of a dinosaur. [Eskom] is slow moving, ponderous and unable to adapt to the changing environment. If things carry on like this, it will go extinct just like the dinosaur did,” says Yelland.
You could argue that dinosaurs, when they were around, had more power.

The Scourge  Of The Dinosaur  In The Dark

Coal mines are the rock upon which South Africa’s power parastatal, Eskom, has been built. They mine 120-130 million tons for Eskom to burn every year. In 2015, the rock that supports 83% of South Africa’s power is crumbling.
The power utility is facing a dim future, through a decline in coal investment.
A senior coal analyst at XMP Consulting, Xavier Prevost, says at least six big coal mines could close down or decrease production by 2020.
“A decline in coal production calls for creation of more mines and failure to do so means all coal-fired power stations will have to close down which will affect electricity output,” said Prevost.
Prevost, who has more than 30 years experience in the coal sector, says too much coal in the market has driven down the prices as demand has fallen.
Countries, like the United States, exporting coal into the international market has also brought down prices, he adds.
Some of the big coal companies in South Africa include: BHP Billiton; Xstrata Coal; Glencore; Anglo American Thermal Coal; Sasol Mining and Exxaro Resources. Their costs rise as coal prices fall.
They supply Eskom with low-quality coal known as middlings, a by-product of the coal washing and beneficiation process. This coal contains about 35% of ash, resulting in low energy output.
Last year, South Africa’s Minister of Mineral Resources, Ngoako Ramatlhodi, said there was coal for export and coal of a lesser quality, which stays in the country.
“[The low-quality coal] we would want to keep for our power stations,” said Ramatlhodi.
Ramatlhodi, however, does not seem to acknowledge that cheap coal means lower electricity output.
To make matters worse, new mines are scarce. In the past six years, there have been fears over mining legislation, the decline in prices, increased competition from the United States, Indonesia, Australia and India and also lingering political rhetoric around nationalization.
Prevost says it’s not too late for South Africa to avert the coal crisis.
“Government has a 90 percent chance to make this better or worse through collaborative efforts between the departments of energy, finance and mines,” he says.
Addressing the media at the Eskom offices in Johannesburg in January, the new Chief Executive Officer, Tshediso Matona, painted a bleak picture saying the power utility can’t cope.
“New generating capacity and other levers are needed in order to ease the pressure on the system,” he said.
Matona says Eskom is like a car running on empty.
“We have arrived at a point that does not allow us to ignore the health of our plants. Our reserve margin is so thin, that every incident creates a major systems issue and could also have safety implications for the plant.”
According to Matona, the problem with Eskom is delayed maintenance and he says most of its ageing power stations face breakdowns.
“We know the problem and we know the solution,” he says.
The big question can be put in one word: When?

The Coal Hole

There were fewer miners at the Mining Indaba this year and more mining service companies to make up the numbers among 7,000 delegates. Everyone is trying to cut costs as commodity prices tumble.
“It’s been a lot quieter this year,” admits one of the organizers.
“The investors are there, but the group is getting smaller and smaller,” says one delegate who asked not to be named.
“I think the opportunities are like the gold rush of 1849 in America,” says Robin Saunders, the head of Clearbrook Capital, an investment company looking to sink billions into African mining on behalf of rich families in Europe and the Middle East.
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There were plenty of strident young mining nations from across Africa selling their minerals. This optimism couldn’t disguise the pain of the hosts; decades of battering and disinvestment leaves South Africa, where once 40% of the world’s mining was carried out, struggling to cling onto 5%, according to KPMG.
Investors are fighting shy of South Africa because of three big problems: power, rather the lack of it, strikes and fears over regulation.
The power shortages that have plagued most mines in South Africa has cost Harmony – the country’s third largest producer – 50 kilograms of gold in the last quarter to December 31,  worth around $1.87 million, according to CEO Graham Briggs. It meant production at Harmony fell 10%, in the last quarter of 2014, to 271,963 oz.
“What happens is we have communication from Eskom that we have to cut our consumption by 10% or sometimes as much as 20%. This means we have to stop milling and hoisting, which impacts on our production,” says Briggs.
Like most large South African mines, Harmony is in a cleft stick. It consumes 2,600MW at its South African operations – enough to power a city and more than half the output of a large coal-fired power station. This means, like most mines in South Africa, it can’t risk the capital to build a generator or power plant large enough for its needs.
South African mining minister, Ngoako Ramatlhodi, just over a year into the job, sees himself as riding to the rescue. Even so, he brushed over the glaring power problem; merely talking about private power producers and getting power from the Grand Inga dam, in the Democratic Republic of Congo, in 2023. It could have been 2093 for all the difference it makes to the mines.
Ramatlhodi’s speech was full of reassuring words for foreign investors: the rule of law was to be respected; the government was prepared to get tough on violent wildcat strikes and the country was open for business.
He wasn’t so clear cut on the regulation front. There was plenty of confusion over the amendments to the Minerals and Petroleum and Resources Development Act – the law that governs mining that is going back and forth through Parliament. President Jacob Zuma sent the amendments back saying they were unconstitutional.
One of the bones of contention is the proposal of so called developmental pricing – that is, lower prices for commodities like iron ore and coal to help stimulate the South African economy. A year ago the miners negotiated so called ‘mine gate prices’ similar to import parity pricing, where transport costs are taken into consideration, leaving the producer with a fair profit margin.
The problem is there is a strong voice within the ruling party for developmental pricing to be written into law. If so, the minister could be handed the power to declare minerals strategic; meaning miners would have to accept government prices and have to ask state permission to export. It could bring down the price of coal for Eskom, with it the cost of electricity, which is likely to be popular with voters.
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But among foreign investors it is likely to go down like a lead balloon laden with ten tons of coal. They are likely to see it as the state tinkering with the economy, laced with uncertainty, at a time when investors are looking for long term stability.
“It doesn’t feel like we are getting clarity,” says Wickus Botha, a mining analyst with EY.
“How long is it going to take to get these regulations through Parliament? It is not going to happen overnight. For the next two years it is going to be very difficult.”
In many other countries in Africa, these fears are far away. Many miners are making hay from Abidjan to Maputo as the hunt for investors overcomes shortcomings in infrastructure and financial systems.
One of them is Mark Bristow, the CEO of Randgold Resources, who has spent 20 years building mines everywhere from Mali to the Democratic Republic of Congo. His company’s results, released at the Mining Indaba, shows this penchant for the byways of African mining is paying off. In its Q4 figures, the company recorded record year-on-year production, up 26%, to 1,147,414oz in a company that is debt free and has paid a dividend at a time when the gold price is falling and most mining companies have forgotten what a dividend is. Bristow says his company is making a 20% real return on investment and is looking to invest in South Sudan and Kenya.
“Risk is in the eye of the beholder, as long as you have a good relationship with the stakeholders it is fine,” he says.
Elsewhere, Côte d’Ivoire, famous for agriculture, has a golden dream. The West African nation plans to open a gold mine every year for the next five years as part of its economic diversification, according to mining minister Jean-Claude Brou.
Gold mining in Cote d’Ivoire has grown rapidly in five years. In 2009, the country produced seven tons of gold; in 2014, it mined 18.6 tons. The country plans to increase production to 30 tons in the next five years.
“That is a very conservative target,” says Brou.
One last cautionary tale for African mining; there was a lot of talk about the increased mining royalties in Zambia and Zimbabwe and the threat they pose to investment.
From the gloom came a voice of sweet moderation from Ghana. The West African nation mined 4.4 million oz of gold in 2014 earning 40% of the country’s foreign currency.
In 2006, Ghana imposed a 5% royalty and mining minister Nii Osah Mills says his country plans to keep it at that rate for at least another 10 years.
“We were thinking recently of increasing the royalty, but we decided against it because we felt it would be disruptive to mining. So, no one is fleeing Ghana and that is a vote for us,” says Mills.
A dash of pragmatism that could help Ghana keep its place as the world’s 9th largest gold producer.

Four Frantic Days  Full Of Fear

It is 16 years since Nigeria drew back from the abyss in the former colonial town of Kaduna. In February 1999, 5,000 Christians took to the streets in an anti-Sharia march to protest the introduction of the strict Islamic penal code. Their contention was that Nigeria’s constitution did not allow federation, or state, to adopt any religion.
The march sparked a deadly confrontation between Christians and Muslims. Three days of street fighting left at least 2,000 dead. President Olusegun Obasanjo dispatched troops as conflict threatened to spread. He managed to head off more fighting, but the rumpus around Sharia law did not go away.
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Obasanjo tried to persuade northern governors to hold off on Sharia law; days before, Kano in the north west, signed a Sharia bill. Weeks later, Zamfara State amputated the right hand of Buba Jangebe after a Sharia court convicted him of stealing a cow. Four northern states: Sokoto, Zamfara, Kebbi and Kano have adopted Sharia law since 1999 and Obasanjo’s negotiations.
Many northern politicians felt marginalized by the new republic under Obasanjo. They complained of a southern and Christian bias and latched onto the rigors of Sharia law to boost waning support.
Fast forward to 2015, as the six-year Boko Haram insurgency rages. Boko Haram has condemned northern governors who have adopted Sharia law. The militants believe the brand of Sharia law practiced in the country is not true Islam and have vowed to wage war until the entire country falls under their brand of Sharia. In this struggle, Boko Haram has captured around 20 small towns along Nigeria’s border with Chad and Cameroon. Militants have also taken larger towns like Mubi in the north eastern state of Adamawa.
Boko Haram renamed Mubi ‘Madinatul Islam’ or the City of Islam. Tens of thousands fled as the invaders hoisted their flag in the deserted emir’s palace and warned that ‘true’ Sharia law was now in force. A market thief was convicted by a Sharia court and his hand amputated to make the point.
Seventeen-year-old Aisha Ibrahim recalls the day Boko Haram rolled into town in with armored cars, trucks and motorcycles. She was still in school when the town reverberated to the sound of gunfire. She ran home to find her parents had fled, leaving her grandmother behind. In the fraught weeks that followed, she says, her best friend, Umma, was forced into marriage with one of the militants. She feared the same fate and fled to Yola in the hope of finding her parents and four siblings. Her father has not been found. She is now back in Mubi after the Nigerian army took back the second-largest commercial center in Adamawa State, after Yola.
Mubi is also the largest cattle trading center in Nigeria. The cattle rearing northerners use the Mubi cattle market as an important trading post to sell to traders from as far as Lagos.
These days the southern businessmen fear the trip north and the insurgency appears to be killing the meat trade, which has yet to recover from a recent truck drivers’ strike.
On the other side of the city, Pastor Titi Adewumi, leader of one of the many churches that dot the landscape of the Adamawa State capital, says residents are depressed by all the security checks. All movement between 12AM and 5AM is prohibited as part of a state of emergency. Interestingly, worshippers are searched before they enter their local mosque or church. But while Yola residents complain, they know things could be worse; Boko Haram, at the time of writing, were engaged in a fight to the death for the control of the Borno State capital, Maiduguri, where a total ban on all movement has been imposed.
In Mubi, there is hope. Retired Colonel, Taboyi Elam Dong, says the recapture of Mubi shows that the Nigerian military is winning the war against Boko Haram. Other towns recaptured include Gwoza in Borno State and Potiskum in Yobe State.
Most people here feel the government is not doing enough as hell lurks around the corner.

The People For Whom  Hell Lurks  Around The Corner

Boko Haram’s latest victim may have been Nigeria’s national elections.
Citing security concerns as reason for postponing the nation’s February general elections by six weeks, the Nigerian authorities have once again succumbed to the bogey of insurgency and insecurity bedeviling Africa’s largest and most populous economy.
The elections will now be held between March 28 and April 11 this year. National Security Adviser, Sambo Mohammed Dasuki, says the government will flush out the terrorists in six weeks. It was a shaky excuse. Nigerians are watching; waiting to see what security magic government will weave in six weeks.
The postponement has near and far reaching implications for the nation and the rest of Africa.
Professor Attahiru Jega, Chairman of the Independent National Electoral Commission (INEC), had previously maintained the commission’s readiness to conduct free and fair polls. Now INEC’s independence and neutrality is being questioned. According to media reports, government may even be shopping for a new, more compliant chairman for the commission.
If this happens, it will translate to political chicanery and serious credibility worries for INEC and the incumbent administration, which funds the commission. The fear that even the new election dates may not be sacrosanct is palpable. Constitutionally, federal and state-wide swearing-in of elected officials must be held on May 29. Observers have called this unfolding scenario a looming coup against democracy in Nigeria.
A prolonged political crisis in Nigeria would further harm efforts at national harmony and stall trade and investment in West Africa, already hit by the Ebola crisis, insurgencies in northern Nigeria and Mali, a democratic interregnum in Burkina Faso, poor external trade balances, fiscal deficits, weakening currencies and mass unemployment.
For most of 2014, Africa’s global image was defined by the Ebola epidemic, despite the scourge being confined to a few countries in West Africa.
Ignoring Africa’s rising middle class, the epidemic revealed the specter of a failing continent,  with poor sanitation, poor health budgets, poor health education, poor medical inventories, poor infrastructure, an entrenched culture of graft and official disregard for society’s commonwealth.
Nigeria’s democratic debacle will therefore be an ignoble chapter in the history of Africa.
For the last 30 months or so, the rest of the world struggled to empathize with Nigeria over its inability to curb the despicable rein of the Islamist fundamentalist group. Boko Haram has made the Sahel forest region around the Lake Chad basin its homestead, launching sporadic attacks into northern Nigerian cities and towns at will; making a mockery of Nigeria’s national security and defense systems. Huge sections of north eastern Nigeria have thus been rendered comatose and ungovernable.
A regional diplomatic initiative involving the governments of Chad, Cameroon and Nigeria failed to plug the onslaught. Indeed the group has become bolder. Last month, Boko Haram threatened to ‘deal with and defeat’ an African Union anti-Boko Haram special force. The group has unleashed more mayhem on northern Nigerian towns even after it kidnapped over 200 teenage girls from their Chibok village school in April 2014.
The political season began last autumn and soon, it would seem that the world had moved on from the sad case of the Chibok girls and the #BringBackOurGirls social media campaign. The conscience of the nation was on the chopping block. Also on the chopping block were investor sentiment and market forces. Agriculture and the automobile industry welcomed new investments in 2014; in the same period, the Nigerian Stock Exchange saw its market cap decline by $8.5 billion, a 13% drop.
Slumping oil prices forced the finance ministry to lower its economic projections for 2015. This year’s national budget was consequently slashed by $3 billion. Nigeria has never saved for the rainy day, largely due to politicians who earn stupendous salaries and allowances and insist on appropriating proceeds from the reserve Excess Crude Account (ECA). Nigeria’s four petroleum refineries operated at less than 50% of their installed capacity between 1985 and 1999 and have remained dormant since then. Parochial politics and economic perfidy has ensured that no new refineries were built in over 30 years.
If business is a natural extension of politics, then it is easy to see why Nigeria Inc. will continue to underperform. The consistent heating of the polity and absence of truth in practically all spheres of Nigerian life is a key hindrance to progress. The system resists reforms. Governance is driven by regional and religious sentiments. The current political class offers little hope. With little or no ideological difference between political parties, defections across party lines is the order of the day. It would therefore seem that principles have no place in Nigerian politics.
With a raft of political parties, presidential and governorship candidates vying for office, this will be the country’s most hotly contested and most expensive elections ever – complete with rented crowds, political hubris and multi-million-dollar media blitz. Nigeria’s cash-and-carry political culture was fully at work.
The late Chinua Achebe once quipped that the problem with Nigeria was Nigeria. The master storyteller would be turning in his grave now, as his beloved nation treks further away from established democratic ethos.
The protracted survival of Boko Haram is a national embarrassment and a scandalous testimonial for leadership in Nigeria. It reflects the failure of the social contract between government and the governed. And as the world prepares to replace the Millennium Development Goals with a new set of goals and priorities this year, Nigerians will also be desperately seeking to replace the mirage of hope with tangible political and economic achievement.

A Coup Against Democracy?

Rowan Leibbrandt trained as a scientist but he ended up selling beer and whisky  in Africa.
A younger Leibbrandt, from the rural Matubatuba, outside Richards Bay in KwaZulu-Natal, South Africa, did everything right. He was a maths and science whizzkid and earned a university degree. But a career in science was not what he had in mind.
It was in 2012 that an epiphany in Nigeria changed everything for Leibbrandt. At the time he was heading Pernod Ricard’s marketing department, selling whisky brands in African emerging economies.
“Time and again I was with these young and rich Nigerians in focus groups. They were amazed by these whisky brands they had never experienced before. There were two things going on there, these guys attracted to international brands and there was this man with a briefcase representing these companies. I said, ‘hang on, I can be that man with the briefcase’. That was my real epiphany,” says Leibbrandt.
A year later, Leibbrandt found his first business partner in South Africa and he quit Pernod Ricard to return and form a company – Truman &amp; Orange. Jason Duganzich, a former brand ambassador for Glenfiddich, and Leibbrandt launched their distributing business in South Africa with a Scottish blended beer Innis &amp; Gunn.
By 2015, Truman &amp; Orange gained two more partners, an incognito financier in Zurich and Robert Hill, a brand specialist based between India and Britain.
“My insight was that in a lot of these African countries, some of the bigger companies are taking their eye off the ball. Things in Africa are happening far quicker than they anticipated. I thought that’s an opportunity for us. In the spirits front, Africa hasn’t really been there with the rest of the world. So, we have a 10 to 15 year window period while these guys are trying to set up in Africa for formidable businesses,” says Leibbrandt.
The journey began when Leibbrandt made his career switch from science.
“I probably wanted to work with people, so I found advertising quite captivating and I started my career in advertising. At that stage, the advertising agency I worked for managed a very small account for Glenfiddich in the early 2000s. The whole whisky phenomenon was not as big as it is now in South Africa,” says Leibbrandt.
He landed a marketing post at Glenfiddich in London in 2005. After three years, the company sent him to Moscow to set up a joint venture marketing business, which encompassed brands such as Glenfiddich; William Grant &amp; Sons; Remy Martin; Campari and Russian Standard Vodka, in a vodka country.
While he was in Russia, juggling work and an MBA at Warwick Business School in England, Leibbrandt met his wife Nadya Surikova.
“My wife Nadya comes from Russia, a country where the idea of working for one company your whole life is absolutely zero. The safest thing for them is to start your new business. One of the things young entrepreneurs often struggle with is the partner who feels security and safety when they are starting a business,” he says.
It was in Moscow where the idea of entrepreneurship took root in Leibbrandt.
“In many ways Russia was quite similar with South Africa, they had enormous political disruptions in the nineties, and later a mass emancipation of people with money that had been put into the system. You had a drinker who didn’t have a role model, like a father who had money, but is suddenly learning to drink these western products that are affordable to him because he’s making money. I started gradually to get the sense that I wanted to do my own thing. Each time I got promoted in the business, I started to realize that it doesn’t matter how high you get but you are still going to be answerable to somebody,” says Leibbrandt.
Leibbrandt says the craft beer revolution in South Africa taught a few lessons to Truman &amp; Orange.  Innis &amp; Gunn is a hybrid of beer and single malt whisky.
“Innis &amp; Gunn is the cornerstone of our business at the moment, but although it is the important part of our story, it’s by no means the most important part,” says Leibbrandt.
By the end of March, Truman &amp; Orange will be shipping its first sparkling wine and whiskies in Angola, Nigeria, Ghana, Congo and Kenya.
And he could have been a scientist.

A Scientist With Spirit

It was a gloomy winter’s day outside the domed Good Hope Centre in the heart of Cape Town. Table Mountain peeped through the clouds and a slight drizzle pattered gently against the concrete roof. It was July 18, 1998, the day that saw the money of poor people stand shoulder-to-shoulder with the rich. A day the dream of turning $840,000 into $628 million took root.
This was the moment when Brimstone Investment Corporation Limited listed on Africa’s largest bourse, the Johannesburg Stock Exchange (JSE). It carried the hope of small shop owners, fishermen and teachers who had put their life savings on the line.
“It was early days at the Good Hope Centre, which is at the foot of District Six, what was then called the Fruit and Veg Market. We had this view we were taking the people to a different kind of market, the market of high finance,” chuckles Fred Robertson, Executive Chairman of Brimstone.
Many of the thousand shareholders that gathered ran the same streets as Robertson. The future entrepreneur and millionaire sold newspapers, apples and popcorn in cinemas in District Six. The company’s choice of District Six as the launch pad for wealth for the people was no accident – rather an unspoken statement. In the 1970s, the apartheid authorities moved Robertson and 60,000 of his neighbors to make way for white residents.
“You must remember there were forced removals across the country, not only in District Six. But we were thrown across this piece of wasteland called the Cape Flats. Families were taken apart. Friends and neighbors were all thrown. We were a family of nine children. My sisters were in different townships. Our family started disintegrating at the time,” says Robertson.
All this was a distant, if painful, memory as the shareholders in the Good Hope Centre stood nervously staring at two large computer screens as they flickered into life. Most knew little about the shares their money had bought. They were a cross section from the margins of Cape Town: the sort of people who walked to work with little money to spare.
This listing was also proof of the promises from Robertson, a former teacher, and his partners Mustaq Brey, a self-taught chartered accountant from Wynberg, and Lawrie Brozin, another chartered accountant who joined the company from his family business in Illovo, Johannesburg; three men, three worlds, three religions; one fear shared with their shareholders – a loss.
“We are talking about a community that was previously disadvantaged that didn’t know about stocks. We listed at R4 ($1.12) and came off at about R6 ($1.68),” says Brey.
“Life was good then, hey?” laughs Brozin.
Since that soggy day in July 1998, the investment company has gone from strength to strength. Brimstone these days claims assets worth $628 million, with an intrinsic net asset value (INAV) of R17.09 ($1.48 in June 2014) a share, a far cry from R4 ($1.12 in 1994) on day one at the JSE.
After 20 years of investment, the group employs around 3,300 and has 16,000 subsidiaries. Its associates are among the biggest names in Africa: Life Healthcare, Oceana, Sea Harvest, Lion of Africa Insurance, Old Mutual, Nedbank, Tiger Brands, Grindrod Limited, The Scientific Group, House of Monatic, Taste Holdings, Afena Capital and Rex Trueform.
&nbsp;
Chili Poppers
The Brimstone trio reflect on leaner times in their humble offices at the back of Newlands cricket ground on a brighter day. Around the boardroom table the mood is easy. In between questions, at least one of the three will reach out to snap up a steaming spring roll or a chili popper, made by Brey’s sister Bibi.
“Your sister is the best cook, I am telling you now,” says Brozin to Brey.
Bibi’s spicy tidbits are a small reminder of how everything, as Leonardo da Vinci said, is connected to everything else. In 1994, Bibi, along with her chili poppers, was at the first Brimstone shareholder meeting in the small Newlands Grounds South Club, a stone’s throw from this boardroom.
“We called in a whole lot of people together and explained to them what we wanted to do. The meals we ordered were from Bibi, she then brought us a bill the next morning,” says Robertson.
“For R5,000 ($1,400),” says Brey, ever the accountant.
“And we then gave her a share certificate,” says Robertson.
“I then said ‘you owe me another R12,500 ($3,503)’. She said ‘I owe you money?’ And I said ‘yes’. She ended up paying the extra money and landed up with 5,000 shares,” says Brey.
“Six thousand seven hundred and fifty shares [in total],” corrects Robertson.
Back in 1994, it wasn’t just the chilies that were popping. In that year, the shareholders spotted their first hot deal. They called it the Oceana deal: a 9.73% stake in Oceana Group, a collection of operating subsidiaries in the fishing and cold storage industries along South Africa’s west coast.
“The bank told us they would give us a loan of R4 million ($1.1 million). We had to raise another R3 million ($842,000) in six weeks. We went door to door. I even remember organizing a bond on the one shareholder’s house to get some money,” says Brey.
“At the time you were starting a company. It’s not like you were buying a company. It was an idea. You were backing guys,” says Brozin.
By 1995, the deal was done; the first drop in an ocean of investments that was to make more than a few waves. Word spread to the ear of former head of state Nelson Mandela.
“Mandela was one of our first shareholders. He paid for shares, like everybody else paid for shares. He saw it in the newspaper and then called us to the presidency and said he also would like to invest, like everybody else. And we said ‘yes of course,’” says Robertson.
“He bought 240,000 shares with
a cheque of R300,000 ($85,000),”
says Brey.
Foul Weather On The Horizon
It was not all fair winds and following seas. Storm clouds loomed over the horizon as foul weather threatened to sink Brimstone.
“In 1995/96, it was the start of a huge boom in the stock market. South Africa was in a fantastic space. Everyone was listing. We used my house as an office in Illovo, a study at the bottom. We had cigars and whiskey. It was just such a crazy time. We became quite substantial after about a year because the market carried us. Then the music stopped,” says Brozin.
The financial storm hit in August 1997.
“The world financial markets were in turmoil. At the listing time it had been up to R6 ($1.68). Our INAV, if you did a calculation of what our values were, it was then R2.50 ($0.35) at that stage,” says Brey.
By 1998, Brimstone’s share price almost hit the seabed.
“Then the vultures came out and said they wanted to buy us out. They told us we could make R150 million (around $30 million)… A financial group in Johannesburg came to us and said why don’t we delist Brimstone, buy the shareholders out at current market price. Buy them out at a rand. Sell all the assets and then make R1.50 (30 US cents) profit,” says Brey.
“But we said we don’t want to leave Cape Town. We’ve taken money from the people from the [Cape] flats; we’d have had to run out of Cape Town if word got out that we’d do something like that. It was unethical. What we then decided to do was sell off all liquid or listed stocks, the easily sellable stuff. Turn that R1.50 and give back capital of R1.50 to our shareholders. Our shareholders liked it, but the market didn’t. Our price went down to about 20 cents ($0.03) in October 2001,” he says.
“The lowest of the low our share was 18 cents,” says Brozin.
In those days, you couldn’t even buy chewing gum for that.
Brimstone weathered the storm and looked to the ocean for salvation. In 2003, they doubled a stake in Sea Harvest to 61.44%, one of the largest hake producers along the west coast – its gross value in 2014 was at just over R557 million ($52 million). The waters appeared to have calmed and the shares rose with acquisitions into Old Mutual (now at $22.4 million), Nedbank (now at $47.5 million), Life Healthcare (now at $202 million) and Oceana (now at $162 million).
Five years later, another whirlwind hit. This time it was the 2008 global financial crisis, in which the whole world got soaked. Companies floundered after the United States (US) property bubble burst. Sub-prime mortgage-backed securities on US property price estimates crashed. The knock on effect hit Cape Town with a vengeance. Brimstone’s headline earnings went from just over R752 million ($69.9 million) in 2007, to a headline loss of about R77 million ($7.1 million) in 2008.
“Looking back over the past year, it was a period that brought some extraordinary challenges. The turbulent and perhaps up to this point, unprecedented deterioration of the global financial market, has and will for the foreseeable future continue to impact on economies, businesses and ordinary people across the developed and developing world. Like many other companies, Brimstone has not escaped the effects of the negative market,” wrote Jakes Gerwel, former Director-General of the Presidency when Mandela was in office and the Non-Executive Chairman of Brimstone in 2008.
By the end of 2008, Brimstone’s net asset value had declined to $204 milion, an erosion of 7.7%.
&nbsp;
Turning Point – Life Healthcare
Joy came in the morning. To the rescue was a lifesaver in more ways than one. The Life Healthcare deal, struck in 2005, matured in 2010 just in time to save the company.
“Life Healthcare issued almost double equity on our shares. In June 2010, we unbundled Life Healthcare and created significant wealth for our shareholders,” says Robertson.
The unbundling threw off the recession and stabilized Brimstone’s name in the investment business. It was a good time to be in the South African private healthcare market with a growing and aging middle class and a cash strapped public health system.
These days, Brimstone’s 5.04% share in the private hospital operator is valued at over $202 million. It’s an important part of the $628-million company. Brimstone’s share price now sits at R17 per share, a far cry from the dark days of 2008 and $0.03.
So, do they think that their shares are undervalued or overpriced on the JSE?
“We’ve always been selling at a discount. We trade at about a 20 percent discount. You will see most investment holding companies will trade at this,” says Robertson.
In the last year, the company has been busy. In April, they sold their shares with the diagnostics group, The Scientific Group (SG), to Ascendis in a deal worth R284 million ($26.7 million). In July, they also led a R1.6 billion ($151 million) transaction giving them an 4.97% share of Grindrod, the South African-based freight holdings company.
“Over the past 10 years, Brimstone has delivered an annual total return of over 40 percent to investors. Over the past year, Brimstone’s exposure to the fishing industry in particular, through Oceana Group and Sea Harvest, as well as its investment in Tiger Brands, has boosted its performance. The underlying assets offer investors the opportunity to get exposure to unlisted companies with good earnings growth. As the company is relatively closely held by investors, with a small free float, liquidity is an issue for new entrants,” says Mia Kruger, Director, Equity Analyst &amp; Portfolio Manager at Kruger International.
“Grindrod has been in existence in Africa for over 100 years. The infrastructure sector which we are busy with at the moment is exceptional. Grindrod, in Mozambique, is doing well with port and the rail,” says Brey.
Other investments include the purchase of a R125 million ($11.7 million) fishing trawler from Norway called The Harvest Atlantic Peace that works for Sea Harvest out of Saldanha Bay, 120 kilometers north of Cape Town.
“She is, touch wood, fishing absolutely phenomenally. [Sea Harvest] certainly is one of the biggest economic drivers along the west coast. I think people underestimate the importance of Sea Harvest. In Saldanha, we must be the biggest consumers of electricity; pay the most taxes; pay the most rates and employ the most people. Again, the knock-on effect from that is an economic driver along there and it keeps hundreds of small shops open,” says Robertson.
A study by the University of Cape Town concluded that this single business was the largest economic driver along the West Coast of South Africa. It employs 2,400 people, of which 51% are female.
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Largest AGM In Africa
Brimstone’s ticket to billions lies in the hands of hundreds of shareholders’ homes across Cape Town. Most of them are working people; one reason why Brimstone hold their AGMs after hours, in the evening.
“In the early days, we had one shareholders’ meeting in the day. People came up to us and said ‘are you going to pay me for my day I am not going to work?’ We’ve learned that part of setting up Brimstone and developing Brimstone was we had a new wave of shareholders, who had never invested in the market before. Shareholders for the first time got shares in a listed company. We had to educate them. I think more of this should have been done in the country to be honest,” says Brey.
“I’ve learned from Brimstone that one takes for granted that you have a stockbroker, you go and buy a share and all is well. But that isn’t the way life works for the shareholder we have. They don’t know what a share is; they don’t know what a share certificate is; they don’t know what a CSDP [Central Securities Depository Participant] is. It’s very confusing. We’ve been very accommodating and I don’t think there is a company today that actually manages that process for our shareholders,” says Brozin.
“Three hundred people come to our AGMs. It’s one of the biggest in the country. I think you can’t go on doing business as usual, offered to us in our new democracy. You couldn’t do this before,” says Robertson.
Empowering the previously disadvantaged remains a core aspect to Brimstone’s success.
“They are saying today one percent of the world’s population owns half of the world’s wealth. That’s why we have some of the issues we have got today,” says Brozin.
“People say [Black Economic Empowerment (BEE)] is dead. I don’t believe that. I believe it’s very much alive. We are going to have to do much more of it if we are going to get this country into the right economic shape that it should be in… We are going to have to rethink in this country for its own good how we’re going to do BEE going forward. It’s going to have to cascade more and go broader.”
When it comes to Africa investing in Africa, they say it’s simple.
“The people of Africa should have more stakes in those businesses than what they have ever had before. That also counts for any region you invest in. You can’t go in and just do business and not employ the people there and not leave the profits behind. You have to leave the country in a better place than what you started in,” says Robertson.
Almost 20 years to the day, it’s a fair walk on a gusty summer’s day as the trio trudge into the wind up Signal Hill. A former teacher and two accountants, who turned an idea into an investment company, look down the valley beneath Table Mountain. In the hazy distance is District Six, the former home of Robertson. It’s one of the only parts of Cape Town that has been left fallow. This is land Robertson and his 60,000 neighbors are claiming back.
“It was our home after all,” says Robertson.
“Oh, I didn’t know you had submitted for that?” says Brozin.
“My family did a while ago. But we’re waiting to hear from the government. Hopefully they won’t give us our piece of land back. We’re hoping they’ll mix it up and give us one higher up on the hill instead. The views from there were much better,” says Robertson.
All three laugh at the joke and the analogy. You could argue Brimstone is always looking to move up the hill.
As the sea crashes onto the Cape Town shore, the sound is another reminder of yet another analogy that even the sturdiest vessels can be wrecked by a violent storm. Just
ask Brimstone.

Tag: March 2015

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The Bus That Led To A Billion-Dollar Business

The Shy Scaly Animal That Could Curl Up And Die

Farming Coming To A Town Near You

The Scourge Of The Dinosaur In The Dark

The Coal Hole

Four Frantic Days Full Of Fear

The People For Whom Hell Lurks Around The Corner

A Coup Against Democracy?

A Scientist With Spirit

Mandela And Billions… Then The Vultures Came Out