Divan Botha from Winslyn hosted Pallidus MD, Stephan van der Walt. An interesting discussion on entrepreneurship and investment banking
October 27, 2021
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Agricultural legend and BKB managing director Wolf Edmayr is a true farmer at heart. He clearly loves being involved in this crucial sector of the economy and enthusiastically talks about his dream as a “part time farmer of 33 years” to build his own homestead by the sweat of his brow when he retires. A better suited leader for 100-year-old BKB will be hard to find.
Relationships are what business is all about. The saying “you don’t do business with businesses, you do business with people” is particularly apt in the agricultural sector. Farmers are simply a different breed. Their passion and love of the land, the animal kingdom and the world’s wonderful flora is as important as running a successful business enterprise. Farming is certainly not all about the money for a true farmer — it’s all about the heart.
The preceding few years were difficult for BKB. An institutional shareholder had a conflicting vision about where and how the company should develop. Entangling this relationship absorbed significant management resources and because some of the details regarding the mutual unhappiness bled into the media, tension ran high.
A positive solution was needed.
Pallidus is a company used to guiding agricultural clients in how to optimally and efficiently structure and finance their operations. The unique intricacies of this sector requires an affinity with the people of agriculture as well as a deep level understanding of the drivers on the business side.
Over the last year or so Pallidus played a leading role in the creation of the innovative Grain Silo Company for its client Afgri Group. This new-world investment vehicle allows institutional investors to invest in Afgri’s grain silo properties. According to CEO Chris Venter the company wanted to significantly grow its business, but the pace of this growth could have been limited if it had to depend only on its own financial resources.
Grain Silo Company solved this challenge by attracting external investors such as Izitsalo Employee Investments, Stanlib Infrastructure Investments, Wiphold, and the Land and Agricultural Development Bank of SA to invest R3.6bn in the group.
When BKB’s Edmayr approached Pallidus for a solution for the BKB shareholder conundrum, he immediately knew he was at the right place. “Going the extra mile is important in business. From the get-go I got the impression that the Pallidus team lead by executive director Le Roux van Zyl was ready and able to assist us with a positive solution whenever we required input, irrespective of early Saturday morning teleconferencing or an all-nighter to get documents ready on time.” The relationship was such that I spoke and deliberated with Le Roux van Zyl regularly.
Due to the complexity of the previous shareholding relationship, BKB and Pallidus dedicated significant resources and time to bring about a final win-win solution to the benefit of all. This came in the form of VKB, a significant agricultural role player in the grain and other sectors taking up an offer of shareholding in BKB.
The transaction closed earlier this year and has yielded significant mutual benefits for both BKB and VKB. “We couldn’t be happier,” enthuses Edmayr. “In VKB, BKB has a partner that shares our values, which is rare to find. We also have a similar way of doing business and we simply get along. There is no substitute for good chemistry.”
Pallidus facilitated the new shareholding transaction by systematically going through the process of finding the best ways to unlock synergies and value. Edmayr says his team, Le Roux van Zyl and the rest of the Pallidus team essentially became one, working around the clock to find innovative structural and financing solutions. “It’s important to note that in reality, many different and complex transactions had to take place in succession to make everything work at the end.”
For Pallidus CEO Stephan van der Walt one of the key attributes of the BKB VKB deal is that two different agricultural companies could come to a friendly shareholder and partnership agreement without any hostility. “This situation is unique in the agricultural sector,” he says. “The traditional orientation and business of VKB is to offer typical agricultural solutions such as silo space, agri-retail, financing and other traditional co-operative type services.
“This means that between BKB and VKB many opportunities exists for future growth together in sectors where strategic synergies can be developed as partners.”
BKB’s Edmayr says the recent transaction facilitated by Pallidus is just the beginning, partly because of the strong team relationship that has developed between Le Roux van Zyl and Christoff Botha from Pallidus and the BKB senior management. “I would describe our relationship with Pallidus as comfortable,” he says. “Now that the BKB VKB deal has closed, we are already seriously considering other opportunities in which Pallidus will guide us to find the optimal solution. We can’t wait.”
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