As South Africa’s election campaign gathers pace, Cyril Ramaphosa, the business tycoon, has ditched his pristine suits for party T-shirts and swapped the corporate boardroom for the boisterous arena of the political rally.
It is a transition that highlights the ambitions of an important figure in the ruling African National Congress, who is considered a shoo-in to become the country’s deputy-president after the May elections.
But it is also a transformation that is set to have a ripple effect through the cosy South African corporate world. Mr Ramaphosa, one of the country’s richest black businessmen, is widely expected to sell his interests in Shanduka, a conglomerate with assets worth $1bn.
If he goes ahead with a sale, as bankers and business partners anticipate, it will affect a raft of high-profile assets stretching from Mozambique to Nigeria. Shanduka’s portfolio includes the South African McDonald’s franchise, a coal mining venture with Glencore Xstrata, a stake in Standard Bank, and Coca-Cola bottling operations.
The decision will also affect his co-investors, including CIC, the China Investment Corporation sovereign wealth fund.
South Africa-based bankers say Mr Ramaphosa’s profile is too high and Shanduka’s investments too important for him to simply lock away his business interests in a blind trust. That was the route chosen by Tokyo Sexwale, another prominent multimillionaire, when he became a cabinet minister in 2009.
Mr Ramaphosa – who re-entered politics when he was elected ANC deputy president in December 2012 – controls a 30 per cent stake in Shanduka. One bank executive says he quietly let it be known his stake was for sale.
Phuti Mahanyele, chief executive of Shanduka, says the conglomerate has been working on contingency plans as Mr Ramaphosa jumped back into politics. “We will make sure that we do all the right things,” she tells the Financial Times in an interview, “especially for the rest of our shareholders.”
Mr Ramaphosa, who has other business interests away from Shanduka, is among the richest and most prominent of a generation of black tycoons who have built business empires in the post-apartheid era. Forbes magazine put his net worth at $700m in November. Patrice Motsepe, his brother-in-law, is widely considered to be South Africa’s only black billionaire, with a reported net worth of $2.7bn.
Mr Ramaphosa is on a political path that may lead him to the country’s top job – particularly given the suggestion by some commentators that Jacob Zuma, the president who has been dogged by scandals, may not serve a full second term.
Martin Kingston, chief executive of Rothschild in South Africa, says a stake sale is necessary to avoid any “innuendo” or “suspicion” if Shanduka or its partners were involved in deals when Mr Ramaphosa had joined the government.
“For the last 13 years he has built a successful, diversified empowerment group, significantly – but not exclusively – based on his own relationships and profile,” says Mr Kingston.
Shanduka has significant other shareholders to consider too. When CIC made its first investment in sub-Saharan Africa it did so by shelling out $243m for a 25.7 per cent stake in Shanduka in 2011. Standard Bank, Africa’s largest lender by assets, holds nearly 13 per cent.
The challenge for Mr Ramaphosa and Shanduka, if he does divest, is that they not only have to find a buyer with the financial muscle to buy him out. It also needs to be someone with a similar stature and network to those of Mr Ramaphosa.
A South African business executive who knows the company says Shanduka may be privately owned but it has still to answer “to a lot of partners, especially the Chinese”. The executive adds: “There is a kind of need for a rainmaker…It’s not just buying his share, but bringing that rainmaking ability.”
In many of Shanduka’s deals it has been the black economic empowerment partner for other companies. Under BEE, a programme pursued by the ANC to redress the huge economic imbalances after decades of apartheid, companies operating in South Africa are obliged to have a certain proportion of black shareholders.
With Mr Ramaphosa at the helm, Shanduka has been the go-to BEE candidate because of his high standing in the political and business worlds, and, importantly, the ease with which he straddles the two.
In political circles he is known for leading a 1987 strike that was a defining event in the anti-apartheid struggle and then heading ANC negotiations ahead of the first democratic elections in 1994. He built his business empire after exiting the political stage in the mid-1990s.
Shanduka says Mr Ramaphosa has been reviewing his business interest since he was elected the ANC’s deputy president. He has stepped down from the boards of Lonmin, the world’s third-biggest platinum miner, and MTN, a Johannesburg-listed telecoms group.
“This process, which involves consultation with affected companies and other stakeholders, is continuing,” the company says.
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