Naspers schemes reveal the rise of black spending power.(Business Report)

BYLINE: Ann Crotty

Johannesburg - The overwhelming success of Naspers's recent empowerment schemes "underscores the extent to which the spending power of black individuals has increased over the past eight years", Steve Pacak, the finance director of the media firm, said yesterday.

When Naspers launched the Welkom empowerment scheme eight years ago, Pacak said, there was little evidence of the spending power manifested by the response to the recently launched Phuthuma Nathi and Welkom Yizani schemes.

Compared with the 17 000 people who invested R16 million in the Welkom scheme in 1998, Naspers had expected "a greater response" for the recent offers, "but certainly not as great as the response we've had".

Pacak said that Naspers had spent a lot of money on marketing the schemes and had undertaken about 60 road shows.

One empowerment analyst, who had earlier expressed reservations about any company's ability to raise funds from black individuals, described the response as "amazing".

The two schemes, which were aiming to raise a combined R600 million from black individuals and groups, were almost three times oversubscribed, attracting applications totalling R1.8 billion.

Under the Phuthuma Nathi scheme, 45 million shares, or a 15 percent stake, in pay television and internet group Multichoice South Africa (MCSA) were offered at R10 each. The shares were attributed a value of R50 apiece, but ownership can only be taken up in five years. The R40 a share discrepancy represents a funding loan to the participants, provided by Naspers through MIH Holdings, the holding company for MCSA.

The Welkom Yizani offer aimed to raise R146 million by giving investors access to a 15 percent stake in Naspers's print media subsidiary, Media 24, through a similarly structured scheme.

Naspers received 120 000 applications with a total value of R1.3 billion for the Phuthuma Nathi scheme and 108 000 applications worth R421 million for the Welkom Yizani offer. If black groups were excluded, Pacak said, the average individual applicant in Phuthuma Nathi applied for, and received, just over R4 500 worth of shares. The average individual in the Welkom Yizani scheme applied for shares worth about R3 000.

Pacak dismissed suggestions that the response had been boosted by applicants fronting for white individuals. "Given the average size of the application, it would not have made sense." He said the offer ensured that anyone found fronting would lose their application sums. It would be impossible to determine how many white employers had applied on behalf of black staff.

The formerly sceptical empowerment analyst noted: "However you look at this response, it suggests that South Africa and its economy are much stronger than was previously assumed."

The success of the schemes means Media24 and MCSA will have to deal with considerably more shareholders than any other firm on or off the JSE. In the shorter term, this challenge will be softened by the eight weeks of interest accruing to Naspers on the R1.8 billion that accompanied the applications.