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Soul City Soul City Broad Based Empowerment Company
Home arrow Our Investment Guidelines Tuesday, 11 December 2018
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Our Investment Guidelines PDF Print E-mail

We adhere to the social and ethical guidelines outlined in our Investment Charter.

The charter determines the ethical parameters of our investments and outlines the kinds of business we will invest in.

We will not, for example, invest in transactions where the underlying business is engaged in arms, military, tobacco, alcohol, gambling or (for reasons of conflict of interest) the healthcare industry.

Generally, we have an interest in companies that have a history of making profits for at least three years, generate positive cash flows before taking into account discretionary investments and have generated EBITDA of at least R30 million in the last financial year.

SCBBEC Investment Charter

  • Soul City Broad-Based Empowerment Company (the Company) will:
    • seek out investments in transactions which entail genuine broad-based empowerment and in companies which are committed to real and tangible transformation in their businesses.
    • invest primarily in transactions where the underlying investment is in a listed company. The Company may, however, choose to invest in transactions where the underlying investment is in an unlisted company, where there is a reasonably clear route to ultimately exiting from and realising the investment, i.e., where the illiquidity concerns typically associated with unlisted companies can be substantially mitigated.
    • make investments both by way of introducing capital into companies (primary transactions) as well as by buying out existing shareholders of companies (secondary transactions).
    • invest in companies operating in South Africa, which includes affiliates or subsidiaries of non-South African companies.
    • invest in project finance investments (such as renewable energy projects) provided they offer strong, consistent cash flows and the investments are in line with risk/return requirements.
  • The Company's investments will be made on financial merit, but it should be conscious of trying to seek out investments in companies that do not undermine, and in fact preferably champion:
    • health and safety of workers, and the populace in general
    • environmental sustainability
    • human rights and fair employment practices
    • ethical business practices
    • job creation
  • The Company will not invest in transactions where the underlying business is engaged in:
    • the arms or military industries
    • the tobacco industry
    • the manufacture or sale of alcohol as their primary business
    • gambling
  • The Company prefers not to invest in transactions where the underlying business:
    • does not have a history of generating profits for at least three years
    • does not generate positive cash flow before taking into account discretionary investments
    • did not in its last financial year generate EBITDA of at least R30 million
  • Cash
    • three primary requirements to be met for all cash investments and in the following order of importance: capital preservation, liquidity and maximizing returns/interest
    • the total cash available for investment must satisfy the following limits: no exposure to less than A-rated investments, maximum 10% exposure to A-rated investments and maximum 25% exposure to AA-rated investments
  • The Company will seek, wherever possible, to avoid investing in transactions where:
    • it is clear that there will be significant job-shedding in the underlying business
    • there is a real danger that the underlying business will engage in activities that are harmful to the environment
    • there is a meaningful risk that the investment will adversely affect Soul City's reputation as a leading NGO that promotes health and development
  • In applying this Charter, the Company will, insofar as it is practical to do so, take into account the activities not only of the company in which it is investing, but also of the activities of any companies in which the investee company is a shareholder.
  • The Company:
    • will seek representation on the boards of directors of the underlying companies in which it is investing in those cases where such representation appears necessary to monitor and encourage compliance with the spirit of this Charter
    • recognises that circumstances change, and that an investee company that complied with this Charter when the investment was made may not continue to do so over time. In that event, the Company will raise concern with the investee company’s management with a view to finding reasonable solutions. In the event that the Company cannot achieve compliance by persuasion or the exercise of any rights it may have, the Company will seek to exit from the investment in question as soon as is reasonably possible
  • Assessment of a potential investment from a perspective of ethical investing, taking into account environmental, social and governance principles.
  • The Company will be especially sensitive to the concerns articulated elsewhere in this Charter when it comes to considering investments in businesses that provide public goods or services, for example health, education, or access to water and sanitation.
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