In one of the most important empowerment deals in the South African R9bn advertising industry, a newly-formed consortium has acquired a stake in the country's largest marketing communication group.
The black consortium has acquired 26% of FCB South Africa, for a speculated amount of R120m, in an agreement widely regarded as a watershed for the industry, not only because of its size, but because it is the first significant deal to include black staff as well as a broad-based empowerment entity, in a bid to unlock wealth creation opportunities for a broader spectrum of South Africa's population. The deal includes an option to increase the consortium's stake to 35% after a year.
The new consortium comprises two investment companies, Sunrise Investment Group and Zwino Investment Holdings, a broad-based empowerment company, Unipalm Investment Holdings and a staff contingent of previously disadvantaged individuals from FCB South Africa.
Major partners in Sunrise Investment Holdings are head of Labat Traffic Solutions Ka Shabangu, Ben Nkosi, and entrepreneur and family businessperson Violet Mphafudi
Zwino Investment Holdings comprises Chairman of Duka Holdings Dalubuhle (Dali) Jonas, Drake and Scull Chief Executive Officer Bonang Mohale, Simeka Investment Holdings Director Khehla Shubane, and FCB South Africa Group Deputy Chairman Nkwenkwe Nkomo.
Unipalm Investment Holdings is a national broad-based empowerment group headed by Ragi (Ragavan) Moonsamy and a consortium of well-known South African professionals including television personality Basetsane Makgalemele-Khumalo.
Established in 1926, FCB South Africa is the country's largest advertising group in terms of revenue, and the acknowledged leader in providing integrated, media-neutral marketing communication solutions, spanning all channels of communication.
In 77 years of operation, FCB South Africa has ranked consistently as one of the top three agencies in the country and 80% of its clients are currently ranked first or second in their markets. Clients include Toyota SA , Vodacom, First National Bank, Siemens, Samsung, Industrial Development Corporation, Adcock Ingram, Bromor Foods, Shoprite, Distell, Santam, Elizabeth Arden, Media 24, Momentum, Trellidor, Mondi, Huletts, Rainbow Chicken, Unilever, Bonitas, Kraft, and SC Johnson.
The FCB South Africa group manages R1.7bn of communication spend on behalf of its clients, and employs 700 people in South Africa. Its offering includes six through-the-line agencies and seven business units specialising in communication channels that cover promotions, design, internet, PR, events, launches, healthcare advertising, financial advertising, CRM and sponsorship. The group also has a strong presence in Africa, where it has developed the largest agency network on the continent with offices in 32 countries.
Speaking on behalf of the consortium, Nkwenkwe Nkomo said all FCB South Africa shareholders were totally committed to black empowerment, to transformation and to the National Agenda. He stressed that the deal was a critical step to the accelerated growth and future well-being of the group, and said that the consortium were eagerly looking forward to being part of a new and exciting chapter in FCB South Africa's history.
FCB South Africa Group Chief Executive, Neil van der Weele, expressed his satisfaction and pride in the deal, saying it had been meticulously thought through, and developed for the benefit of all the partners.
"As this deal involved four independent partners, it is almost certainly the most complex, and largest, deal that the advertising industry has seen to date, and differs markedly from those concluded by most agency groups over the past few years," he said.
"From the outset, we were clear that we would not rush into a partnership simply for the sake of doing a deal. Our key objective was to position the group for a very successful, long-term business future, for the benefit of all the partners. We also felt that it was important that the deal benefited a much broader community. And I have no doubt that we have achieved these objectives."
Van der Weele pointed out that the major difference between the FCB South Africa deal and those signed by most other industry players was its size and shareholder mix. The majority of other deals have been structured around equity acquisition by one, or a few, individuals or companies, whereas this deal includes some previously disadvantaged staff, a broad-based empowerment group and two investment companies.
"I'm sure our clients will be delighted with the deal, as they are all committed to working with black-empowered partners. Staff, too, want to be part of a company that is committed to transformation and the National Agenda. There has been an enormous amount of excitement and anticipation from the staff regarding the deal – they realise that the deal will bring with it a lot of new business opportunities and company growth and, through this, opportunities for personal growth.
