FirstRand BEE

completed

The project under consideration is to finance the acquisition and transfer of 6.5% of FirstRand Limited’s (FirstRand or FR) common shares to a select number of broad based Black Economic Empowerment (BEE) groups in South Africa (SA). The project marks a significant step by FirstRand towards satisfying the BEE requirements of South Africa’s new Financial Sector Charter. In addition to the ownership transfer financed under this project, FR will allocate another 3.5% of its shares for the benefit of its black South African staff and non-executive directors. Together, these share transfers will amount to 10% of FR’s outstanding shares.Under the terms of this project, FirstRand will create the FirstRand Empowerment Trust (the trust), an entity which will hold 6.5% of FR’s common shares with an approximate value of ZAR4.5 billion (appr. $740 million), and whose beneficiaries are four BEE groups. FirstRand will capitalize the trust with ZAR1.5 billion (appr. $245 million) by donating an equivalent of 2.1% of FR’s shares to be issued. The required funding of ZAR3.0 billion (appr. $490 million) for the rest of the 4.4% of FR’s shares will be raised from senior and subordinated (mezzanine) lenders. IFC is one of the mezzanine lenders with a proposed participation of $30 million equivalent. The funded shares will be acquired directly from select shareholders of FirstRand. Black ownership and control through board representation constitute only one element of FirstRand’s BEE program. In accordance with the Financial Sector Charter, which was voluntarily developed by the entire sector, FirstRand is committed to a host of measures to address the social and economic inequalities which hold back South Africa from realizing its full economic potential. These measures include skills development and training for black professionals and managers, senior appointments, access to financial services, procurement and sourcing from black owned ventures. In brief, FirstRand is pursuing a comprehensive transformation program, with specific and measurable targets over the next decade.