Pieter Engelbrecht-led Shoprite creates $559.3-million Black empowerment trust

Shoprite Holdings, Africa’s largest supermarket retail chain led by CEO Pieter Engelbrecht, has issued R8.9 billion ($559.3 million) in shares to its 126,000 South African employees through its subsidiary, Shoprite Checkers Propriety Limited.

The new shares, which will be allotted as part of its Black economic empowerment trust, will boost Shoprite Checkers’ effective Black empowerment ownership to 19.2 percent, up from 13.5 percent.

The move, which comes three months after Shoprite Holdings reported a profit of R2.73 billion ($171.5 million) in the first half of its 2022 fiscal year, is consistent with the group’s core values of recognizing the important role that its employees play in the leading supermarket chain’s growth and success.

The 40 million shares in the trust will be divided into 4 million Class-A shares and 36 million Class-B shares. The trust will directly benefit South African employees, while its 16,000 non-South African employees will receive a cash bonus payment.

Shoprite Checkers will contribute R888 million ($55.8 million) as part of the agreement, allowing for the subscription of 10 percent of the shares to be held by the Shoprite Employee Trust, with the remaining shares funded on a notional basis by Shoprite Checkers.

Furthermore, eligible RSA and non-RSA employees will receive an initial distribution of R77 million ($4.84 million) for the six-month period ending Jan. 2, 2022.

The transaction is expected to have a 2.7-percent impact on Shoprite Group’s headline earnings, while having no effect on Shoprite Holdings’ stock.

Shoprite Holdings Limited is South Africa’s largest food retailer and Africa’s largest retailer. The company employs about 142,000 people across the African continent in more than 2,913 stores.

Shares in the leading retailer were worth R215.9 ($13.55) per share as of press time on May 18, giving the company a market capitalization of R129 billion ($8.1 billion) on the Johannesburg Stock Exchange, while Engelbrecht’s 0.15-percent stake is worth R193.5 million ($12.2 million).