In September 2011, news of Bank Saderat Iran’s involvement in an embezzlement operation became public. Amir Mansoor Khosravi, an Iranian businessman, had used fraudulent documents from Bank Saderat to obtain bank loans that amounted to US$2.6 billion.  At the time, the fraud was the biggest in the history of Iranian banking and those implicated faced harsh penalties, including death sentences.  As Iran’s public prosecutor investigated the case, senior officials at Bank Saderat denied having any knowledge of the fraudulent operation.

No of Pages: 9

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This case is about competing bids from AngloGold in South Africa and Newmont in America for the control of Normandy, Australia's largest gold producer. The choices facing AngloGold in its strategy to acquire Normandy and ward off the competing Newmont bid are presented. The vagaries of national perceptions and loyalties, exchange rates, media and investor relations and the key role of arbitrageurs and hedge funds are introduced.  A platform to analyse and compare strategies for bidding and target companies to respectively gain and resist control, is created..

No of Pages: 8

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On 11 November 2015, Carlos Brito, chief executive of global leading beer brewer Anheuser-Busch InBev (AB InBev), presented his final offer of US$105.5 billion (£69.8 or £44 pounds per share), to acquire its rival, SABMiller, which the company accepted. The acquisition process had started in September and just over a month later, on 13 October, SABMiller had accepted the offer in principle, but had certain requirements before it would accept. Such a massive transaction could well present hurdles – one being anti-competitive issues.

But would this acquisition deliver synergies soon enough for InBev, Brito wondered?

No of pages: 42 pages

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In late June 2012, the results of a long-term investigation by the United Kingdom’s (UK) financial watchdog, Financial Services Authorities (FSA), revealed that derivatives traders and bankers at Barclays bank had been colluding to influence submissions that influenced the London Interbank Offered Rate (LIBOR) and the European Interbank Offered Rate (EURIBOR).

The investigation also showed that Barclays’ employees had colluded with colleagues at other major banks to influence their LIBOR and EURIBOR submissions, and consequently reduce the rate at which the two had been set. This had allowed the banks to make greater profits on trades, especially in the United States (US) derivatives market, which often relied on LIBOR as a reference rate for financial products.

The scandal led to the resignation of the Barclays chief executive officer (CEO), Bob Diamond, and a number of the Barclay’s senior executives, as well as the imposition of a hefty fine on the bank.

No. of pages: 14

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It was June 2010 and Dave van Niekerk, the chief executive officer (CEO) of micro-lending company Blue Financial Services (BFS), had just handed in his resignation. BFS, which listed on the Johannesburg Stock Exchange AltX  in 2006, had in less than four years expanded its operations to 15 African countries from an original five and employed more than 3 000 people. During this time, however, the company had faced escalating problems that had resulted in a write-off of more than R1 billion and a share price – which had reached a high of 700 cents – dropping to 15 cents. A rescue deal by turnaround expert Johan Meiring of private equity firm Mayibuye Group (Pty) Ltd was on the cards, and had forced van Niekerk’s resignation. Van Niekerk asked himself what had gone wrong and could the company, under new management, be saved?

No of Pages: 20

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In May 2009, news of Deutsche Bank’s spying operations became public. Over a period of six years, the bank’s corporate security department had conducted secret surveillance of certain employees, board members and shareholders. Deutsche Bank had hoped to use the knowledge gained to its advantage in court or in the media. Thus, the bank faced the possibility of legal action instituted by the people it had spied on. Furthermore, news of the spying operations had the potential to damage Deutsche Bank’s reputation as a trustworthy institution.

No of Pages: 14

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At the end of the third quarter of 2007, Leon Kirkinis, chief executive officer (CEO) of African Bank Investments Limited (ABIL), unexpectedly arrived at the head office of Ellerine Holdings Limited (EHL), a South African furniture retail group, with a proposal to purchase EHL. For some time, EHL, which derived a substantial portion of its profit from loans provided to customers wishing to buy furniture, had been looking to enter into a deal with a bank as a means of growing its business. Up until the ABIL offer, EHL had been seriously considering a joint venture with Capitec Bank. Now, EHL’s CEO, Peter Squires, and the EHL board had to decide which route to choose.

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In August 2014, seven years after Ellerine Holdings Limited (EHL) had been purchased by African Bank Investments Limited (ABIL), the board of EHL announced that EHL and Ellerine Furnishers (Pty) Ltd (EF) had applied for voluntary business rescue. The new EHL chief executive officer, Mano Moodley, and his board wondered if their decision to partner with ABIL had been too hasty. If they had chosen an alternative partner, would the outcome have been different?

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As Geoffrey Qhena, chief executive officer (CEO) of the Industrial Development Corporation (IDC), sat in his office at the organisation’s headquarters in Johannesburg, reviewing details of the recently published annual report in preparation for a meeting with the board, he reflected on the state of the organisation he had led since 2005.

Now it was October 2012 and, under his leadership, the performance of the organisation was generally lauded as impressive. Qhena wanted more, intending to grow the development impact of the IDC by increasing its minimum loans from R1 million to R5 million in 2013. He wondered how best to achieve this in the current environment of economic uncertainty.

No.of pages: 25

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On 15 September 2008, Lehman Brothers Holdings Inc. filed for bankruptcy protection at the United States Bankruptcy Court in Manhattan, New York. The news of Lehman’s bankruptcy filing sent shockwaves through the United States (US) financial markets, the impact of which was later felt across the world, contributing to the global financial crisis in the same year. As a major American financial institution, Lehman held US$639 billion in assets at the time of its demise, making its bankruptcy filing the largest in the history of the US. Once looked upon as “too big to fail”[1] by financial analysts, a combination of misjudged calculations in subprime lending[2] and commercial mortgage-related investments, coupled with the quest to increase profitability, resulted in the collapse of the bank.

No of Pages: 15 Pages

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[1] A term used to describe very large financial institutions. The failure of these institutions could be disastrous for the economy, thus forcing the government to step in and assist. [Source: Dash, E. N.D. ‘If it’s Too Big to Fail, is it Too Big To Exist?’ available www.nytimes.com (accessed 18 January 2013).]

[2] Subprime lending involves providing loans to people who may have difficulty maintaining the repayment schedule. These loans tend to have high interest rates and less favourable terms to compensate for the higher credit risk.

It was approaching the middle of the 2006/07 financial year. The Johannesburg Hospital finance director, Gumani Matodzi, had just completed another weekly run of the hospital’s top 20 goods and services expenses. As always, National Health Laboratory Services (NHLS) expenses were at the top of the list and yet again they were over budget. The demands of the Public Finance Management Act (no 1 of 1999) (PFMA) made it important to ensure that the hospital did its best to stay within its budget, and Matodzi wondered how he could better manage NHLS expenditure.

No. Pages: 17 

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Piet Malan, CEO of Metermatic, had to come to some decision about whether to attempt a management buy-out (MBO) of Metermatic from its parent, SAFREN. Malan’s management team, particularly the sales manager, were very keen to take management control of Metermatic, but Malan was more cautious. He was worried about the risk of the high levels of debt that Metermatic would have to sustain and the fact that Equis, the private equity company, wanted him and the management team to put up some of the equity. Yet this was a rare opportunity that might not present itself again.

No. Pages: 17 

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In late March 2012, the Securities Exchange and Surveillance Commission (SESC), the investigative unit of the Japanese Financial Services Authority (FSA), confirmed that Nomura Securities Co., Ltd (NSC) – a subsidiary of Nomura Holdings, Inc. – had been involved in insider trading. On at least three occasions, before official announcements for share issues were made, employees at NSC leaked confidential information on securities offerings that the firm underwrote, with the aim of stimulating market demand for the shares. While trying to repair its tarnished reputation, the company faced hefty fines from the Japanese financial regulators.

No of Pages:  16

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In January 2008, the black-owned Pamodzi Investment Holdings (PIH) was at a crossroads, as its chief executive officer (CEO), Ndaba Ntsele, sat down with his board to discuss how to finance the growth of the business. Ntsele and co-director, Solly Sithole, had founded PIH’s predecessor, Pamodzi Property Developers, and grown it from nothing in 1979 to a multi-million rand concern, using only debt finance and working capital.

PIH, founded in 1997 to take advantage of the opportunities presented by black economic empowerment (BEE) deals, had followed the same funding strategy. But Ntsele wanted to grow PIH into an organisation comparable in size and stature to Anglo American or Bidvest, and he was not sure that PIH could achieve these aims using the same strategy as in the past.

The board was, therefore, considering whether or not to list the company and, if not, how they could raise the funding necessary to achieve the strategic goals of the business.

No.of pages: 13

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In early July 2012, the United States Commodity Futures Trading Commission (CFTC) filed a federal lawsuit against Peregrine Financial Group Inc. (PFG), a futures trading firm, and its founder Russell Wasendorf. The CFTC accused PFG and Wasendorf of fraud, violating customer funds amounting to US$215 million and submitting false financial reports to the National Futures Association (NFA), which operated under the CFTC’s supervision. PFG faced liquidation and Wasendorf, if found guilty, faced a fine or a jail sentence.

No of Pages: 16

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It was December 2009, just over a year since Remgro Limited (Remgro) had completed the distribution of its indirect shareholding in British American Tobacco plc (BAT): 90% of its shares had gone to its shareholders, while the balance of 10% went to a new investment vehicle listed on the Luxembourg Stock Exchange, called Reinet Investments. The shares received by Remgro in Reinet Investments were also distributed to its shareholders. Thys Visser, chief executive officer of Remgro, sat in his Stellenbosch office and reflected upon the transaction, which had resulted in the largest dividend distribution in the corporate history of South Africa. The process had taken approximately two years from start to finish, and Visser concluded that the transaction had been implemented and completed successfully. “Our shareholders got direct access to the asset [BAT shares] and we didn’t sell out – and we found a sustainable solution,” he explained.

Remgro’s market capitalisation had dropped by more than half in the process, with the market value of its interest in BAT comprising 52% of Remgro’s last reported net asset value. Visser thought about whether this would require a change in investment strategy for the company. He was not concerned about the reduction in Remgro’s size, recalling that they had shrunk the business when its international assets were split off into Compagnie Financiere Richemont AG (Richemont) in 1988, and once again when technology-driven investments were placed into VenFin Limited in 2000. Remgro had continued to grow on each occasion, despite the restructuring, and he pointed out that it was what you did with your remaining assets that counted.

No.of pages: 23

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Simon Stockley, SA Home Loans’ CEO, was a lawyer by education but an entrepreneur by nature; his colourful, nonconformist socks epitomised his character. The first person in South Africa to build a business based around the concept of securitisation, he had taken just five years to break into South Africa’s capital market and take on South Africa’s major banking institutions. He had gained approximately 11% market share for new mortgage bonds (estimated to be worth R500 million per month), 3% of South Africa’s estimated R258 billion total mortgage market, and forced the banking institutions to change their home loan finance modus operandi in response to his competition. Despite these achievements he was dreading the upcoming board meeting – he could predict the question that would be asked; the question for which he, as yet, had no sure answer. At the end of the board meeting Laurence Rapp, director of strategic investments and alliances, Standard Bank, would ask, “So Simon, what is your next BHAG?”

No. Pages: 21 

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A management buyout (“MBO”) involves the purchase of an existing business by its senior management team. It has proved itself to be an attractive vehicle for management, who can accumulate wealth in the form of an equity participation in their company. This note looks at salient features of MBOs, such as how they are structured and financed, and how equity is allocated. It also examines how to evaluate an MBO candidate to guage whether it has potential for success.

No. Pages: 4 

This note provides relevant background for the matermatic case below.

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On 6 August 2012, Benjamin Lawsky, superintendent of the New York State Department of Financial Services (DFS), announced findings from an investigation of Standard Chartered Bank New York (SCBNY). The DFS claimed that over nine years, SCBNY had hidden 60 000 transactions totalling US$250 billion for Iranian banks on which the United States (US) government had imposed sanctions. The announcement resulted in a loss of £4.81 per share from Standard Chartered Bank’s (SCB) stock, erasing £11.5 billion from the bank’s market value. SCBNY accounted for 15% of SCB’s revenue, and faced the possibility of having its banking licence revoked by the DFS.

No of Pages: 12

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In August 2006, the lease on The Phone Shop – a business that the Brill family had run for the past 18 years – was up for renewal. In recent years, the shop had not performed well, but Eran Brill believed that because it had developed a strong brand over the years, there was potential to make it profitable once again. Still, a lot of people felt it was best simply to close the shop down. Brill wondered whether he should listen to this advice or to his own instincts, and if the latter, what he could do to turn the shop around.

No.of pages: 3

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In August 2009, Eran Brill, director of The Phone Shop (Pty) Ltd, a consumer electronic goods retailer, was about to renegotiate the lease on his Sandton City store. This event marked three years since he had taken over the store, at a time when it was struggling to make sales and to meet its debt obligations. Since then, he had managed to put The Phone Shop onto a much sounder financial footing, and he had opened two more stores. Looking ahead, he wondered whether he could improve on what he had achieved, in the next three years, particularly now that the recession had started to take hold. 

No.of pages: 8

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On 8 February 2017, parties to the National Economic Development and Labour Council (NEDLAC)[1] signed an agreement on the introduction of a national minimum wage (NMW). The only party that refused to sign the agreement initially was the Congress of South African Trade Unions (COSATU)[2], but it subsequently signed on 2 March 2017.

[1] NEDLAC’s social partners were representatives of government, business, the community sector and three labour federations.

[2] The reason given for this was that COSATU had to report to its Central Executive Committee before signing. See: Staff Reporter (2017), “Ramaphosa signs National Minimum Wage Agreement of R20 per hour”, Mail & Guardian, 8 February, available at: https://mg.co.za/article/2017-02-08-ramaphosa-signs-national-minimum-wage-agreement-of-r20h(accessed 14 March 2017).

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In April 2011, Hani Niayesh, owner and managing director of breakfast cereal manufacturer, Tia’s Muesli, received an unexpected phone call from the Pick n Pay Hypermarket Head Office. The retailer, which formed part of one of South Africa’s biggest supermarket chains, invited Tia’s to list with it again. In 2009, Niayesh had obtained a listing at a few Pick n Pay Hypermarkets in Johannesburg. Eighteen months later he delisted, disillusioned by his experience. Despite promises of support from the retailer, Niayesh was undecided whether to venture back into what he recalled to be a minefield. Would it make business sense for Tia’s Muesli to list with the retailer again?

No of Pages:  11

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On 15 September 2011, news of United Bank of Switzerland’s (UBS) operational failures in its investment banking division hit the market. Kweku Adoboli, a trader who worked at UBS’s central London branch, had beaten the control system and carried out a number of unauthorised trades. The trades cost UBS US$ 2.3 billion in losses – the biggest trading-related loss in the history of banking in Britain, with the impact felt across banks in Europe. Engulfed by calls for closer scrutiny of its entire operational system and trading culture, senior management at UBS fought hard to restore confidence in the bank.

No of Pages:  13

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