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May 6, 2008

Interest rates disempower BEE deals

Black economic empowerment (BEE) deals involving the acquisition of shares with no cash injection from the BEE partners - but rather with financing from third parties - could collapse under the heat of high interest rates, according to Kevin Kerr, the joint head of corporate finance at Investec.

Kerr said the transactions likely to find themselves under water were special purpose vehicle (SPV) type deals, which became popular about 10 years ago. "There are many deals that have been financed through SPVs in South Africa's corporate landscape," he said.

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Posted by StaffWriter at May 6, 2008 12:38 PM