Capitec Bank Holdings Ltd

Capitec is a South African retail bank with its core focus being simplifying banking and banking products for customers. Differentiating features include low bank fees, a simple banking app to save time and effectual saving products. Lebashe is one of the largest stakeholders of Capitec.

The detailed history of how Lebashe achieved its exposure is as follows:

  1. PIC acquires 5,284,735 CPI BEE shares from Coral Lagoon Investments (Pty) Ltd (“Coral Lagoon”) at a price of R 156.11 per share on 29 February 2012. Price is calculated as 15% discount to the 30 Day VWAP as at 29 Feb 2012;
  2. PIC reached agreement with Capitec that the shares would only be sold to a BEE investor and that the sale to a BEE Investor would happen within 5 years;
  3. It is important to note that after 3 years of holding these shares for a BEE transaction, the PIC had not yet received a viable offer to purchase. Many entities had approached the PIC but the offer was contingent on the PIC funding the BEE group for the acquisition;
  4. Lebashe/Petratouch, a 100% black owned entity sent a fully funded unsolicited OTP to the PIC on 23 February 2015. Lebashe presented an offer, with funding from Investec Ltd that was sufficient to cover 100% of the purchase price and the transaction costs;
  5. This transaction was Phase 1 of a proposal to build a fully-fledged black owned and controlled financial services business, with the ultimate objective of building a black owned bank;
  6. On 4 March 2015, a counter offer from PIC is received and accepted;
  7. Time lapse of 2 months due to various approvals from both Investec and PIC; drafting and execution of legal agreements and other related matters created a significant pricing mismatch which required the parties to reconsider the transaction structure;

8. Lebashe was able to cash settle on 18 May 2015, by which time the Capitec share price had increased to c. R 530 per share. The revised pricing mechanism of 15% discount to the 30 Day VWAP suggested a revised price of c. R472 per share.

9. The PIC proposed increasing the price, notwithstanding the agreed price (R 325.17) and following negotiation, Lebashe accepted the upward adjusted price, after the discount for the BEE lock in, of R 472 per share. Following the repricing, the profit on sale for the PIC was approximately R 1.7 billion;

10. Lebashe, in negotiations, accepted the increased price but requested funding  assistance as the funding previously raised was only sufficient to settle the lower purchase consideration. The funding structure used was already executed and was inflexible.


The shares were therefore funded as follows:



Bank loan


PIC: Loan A

R 719,939,449



11. The PIC reached a compromise and agreed to provide the funding for the difference subject to strict terms and repayable within 3 years.

12. In July 2016, PIC approved the release of a 2nd tranche of funding to acquire BEE Capitec shares from the original Capitec BEE investor, Coral Lagoon.

The ESG conditions for the loan and transaction set by the PIC was as follows:

  • Lebashe would provide a liquidity event for BEE investors who had been CPI BEE investors since 2007;
  • Lebashe would seek to create a structure to provide for more liquidity in the CPI BEE share given that the share BEE conditions were perpetual;
  • The revised structure was to be designed such that the share created tangible value to the new shareholders;
  • Lebashe would allow minorities to participate in any structure devised to achieve the above;
  • Capitec approval and sign off of the transaction was required.

13. In July 2017, Lebashe submitted an offer to Coral Lagoon to acquire all 4.7 million Capitec shares owned by the company. Given the nature of the offer, approval was required from Capitec, the Competition Commission and the Take Over Regulation Panel. All approvals were obtained prior to concluding the deal.

14. In the end, shareholders holding 3.1 million shares accepted the offer and sold the shares to Lebashe. Shareholders of circa 1.6 million shares decided to remain invested in the Coral Lagoon structure. As a result, only R 1.2 billion of the facility was drawn down.

15. Lebashe funded its cash/equity contribution using the proceeds from Sanlam Wealth as well as cash reserves;

16. The rational in acquiring a strategic asset first for Lebashe, was to deploy the Permanent Capital model which was used successfully by groups such as FirstRand, Sanlam, PSG and many others. The idea being to create a permanent source of equity that is readily replenished and available to the entrepreneurs to grow their business. The track record of providing short term, working capital loans have proved to be extremely ineffective;

17. In March 2018 Lebashe fully repaid the capital plus interest to the PIC from the first loan. PIC received in excess of R 200 million profit on this first loan;

18. To-date, on the Capitec BEE share warehousing, the PIC has generated profit for the GEPF beneficiaries of close to R 2 billion while still supporting BEE objectives, assisting Capitec in maintaining their BEE scores and creating a black owned and managed financial services group that is successful and continuing on their growth path;

19. Lebashe is still currently in discussions with Capitec to design and implement a structure to achieve the objectives listed above;

20. The loan from the PIC is up-to-date and repayments have been made in accordance with the loan agreements, including all covenants being met. Lebashe is required, in terms of the agreement, to report quarterly on our financial position to ensure no covenants are breached.