I've been looking at this BEE deal. From a BBBEE perspective I think it will achieve its objective of gaining many new black shareholders. It certainly will enable Naspers/Multichoice to earn additional BEE ownership points.

There is quite a lot of emotion surrounding this offer - the usual "it's discrimination" type of comments on many web sites and blogs. I suppose this is to be expected when a good offer like this is made to the public. Personally I think it is better than making a good offer only to an exclusive group of wealthy black businessmen.

Some points I gleaned from the prospectus:
NB I am not a financial advisor, so I am not giving any opinion as to the financial benefits of the scheme..

The offer is confined to black people or black groups (it is a BBBEE offer).
Black people or groups purchase shares in the Phuthuma Nathi company at a cost of R10 per share (minimum R200)
The shares will be worth R50 - subsidised by Multichoice. This looks like you can buy shares worth R50 at R10 - a good deal - bearing in mind the interest cost of money by having the R10 tied up for a minimum of 5 years.

By implementing this type of scheme Multichoice can really benefit:

- Some of the dividends received by Phuthuma Nathi from Multichoice will be used to pay off the debt to Multichoice for the shares.

- There is the tax saving that they will be able to benefit from this scheme. Based on what I learned from our tax workshop they can claim the extra cost per share ie. R40 per share (R50 - R10) as a form a taxable expense (subject to a maximum of R3000 per annum per new shareholder.

In the end the scheme may end up costing Multichoice nothing. They will of course profit from the fact that they are becoming a lot more BEE compliant.

A point I would have emphasised is that black women earn more points than black men - they should have made an extra effort to attract black women to the scheme.
How? By offering preferential rates to black women - maybe charged R10.50 per share to black men, and R9.50 to black women.

The only problem is by going public with this offer, they will get a lot of criticism from white people unable to partake in the offer.

In summary:
Is this a good deal for Multichoice, from a BBBEE viewpoint? Yes.
Should your company copy this scheme? Maybe - contact me if you need an opinion.