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Robert Gumede kicks in R75m, but long time partner Carlos Ferreira calls time on Gijima
Robert Gumede, or “RG” as he’s known to both friends and foes, is a larger than life character people either love or hate. Whatever your view, one has to admire his ability to have pulled himself up by the bootstraps. In his pre-teens he worked as a caddie at his local Nelspruit golf course, then as a gardener, then petrol attendant before departing for university in KZN where he earned a Law Diploma. He didn’t serve the legal profession for long, preferring instead to refine his entrepreneurial talents. He first hit the limelight through ownership of his home town’s once top rated Dangerous Darkies football team. Gijima, the IT business he founded and ran with accountant Carlos Ferreira, was perfectly positioned to benefit from Corporate South Africa’s Black Economic Empowerment frenzy. It’s fortunes peaked in 2005 when it merged with Pretoria-based AST. At the time, Gumede’s share of the business was worth over R600m. But the share price has been on the slide pretty much ever since. And as RG explains in this interview, he needed to kick in half of the recent R150m rights issue required to keep Gijima afloat. This interview with Gumede and Gijima’s acting CEO Eileen Wilton was held a couple hours after the company announced that Ferreira had decided to leave the group.
ALEC HOGG: Long serving Gijima Chief Financial Officer Carlos Ferreira has stepped down after eight years in the role. The company has appointed Liesl Tweedie as acting Chief Financial Officer. Joining us now is Chairman and Founder, Robert Gumede and Eileen Wilton, acting CEO of Gijima. Talking to people in the marketplace Robert, it’s a real shock because Carlos and you go back to the early days of Gijima. In fact, when you did the merger with AST in 2005 I remember chatting to both of you at that point in time. Why is he leaving?
ROBERT GUMEDE: Alec, it’s unfortunate that a time comes like this where an individual decides to move on. But we must also remember that Carlos has been at the helm as a CFO at Gijima for almost eight years. My strong belief is that in companies like this – you’ve done it yourself, you know, you’ve stepped down – so that you can allow other people to come in, into the organisation.
ALEC HOGG: So that’s what this is about. Because you’ve just had a rights issue. You’ve gone to shareholders and said “give us another R150 million”.
ROBERT GUMEDE: Yes – sure. We’ve just done that. But more importantly,
the shareholder that came up for 50% of that R150 million is sitting here talking to you.
That demonstrates the confidence that I, as a shareholder and also as Chairman of the Board and my other Board
colleagues are very comfortable of where the business is.
ALEC HOGG: You put R75 million of your own money back into the business?
ROBERT GUMEDE: My own money. I didn’t borrow it from any bank. I wrote my personal cheque so that…because I would have been severely diluted otherwise. But we understood it was something that I had to do, otherwise I’d be sitting here owning almost 10% of the business, from 37%.
So if there was a person who was…who felt the pain, it was me and I still had to put in R75M.
But I’m very comfortable with what we have done and I think since the changes that have taken place in the organisation, Eileen has stepped in, into the shoes of being interim CEO. She has done a fantastic job – battled down some of the problems that we’ve had. She’s been responsible in leading management in terms of finalising the rights offer. The rights offer has been finalised. We are very happy that all the major institutional shareholders followed their rights, and it’s a first.
ALEC HOGG: They didn’t really have an option. Eileen, from your perspective…They didn’t, Robert. Either they get diluted as you were saying earlier or follow their rights.
ROBERT GUMEDE: Sure.
ALEC HOGG: From your perspective (Eileen), Carlos is integral with investors and Gijima AST. He’s been on roadshows. In fact, he was on this roadshow with you guys for the Rights issue. Have you had any phone calls yet from people saying “what’s going on?”…. I guess it only came out this morning.
EILEEN WILTON: Yes. It only came out this morning, so the important thing that we’ve shared with the market –
and we’ve been consistent with me coming in as acting CEO – is that business strategy does not rest in one person. Our strategy is a strategy that is owned by the Board and owned by the EXCO, so I don’t want to overplay the loss of a key individual. He has played his role. He has decided for his reasons that he was satisfied with the role he’s played and he recognised that we needed to move on together and that’s important for us.
ALEC HOGG: You know Irnest Kaplan very well; one of the top-rated analysts. I chatted to him this morning. He was on his way to Botswana. He brought out a report in April where he said after years and years of being your biggest supporter, he’s turned the other way. He said to me this morning; he’s very worried. What would you say to someone like Irnest?
ROBERT GUMEDE: I guess that someone like Irnest – and I know he’s been a supporter of the business – and he must understand that the Board is seized on making sure what has happened in the recent past within Gijima doesn’t ever happen again. We have introduced new measures in the organisation, brought in accountability, made sure that our focus in servicing our clients is really improved and we’ve also made sure that the company has enough capital for it to be able to position itself for growth. And we are already seeing that the most important is; our clients are not nervous, and I think Eileen can talk about the renewals that we have finalised in the recent past. And maybe you need to…
ALEC HOGG: Unfortunately we’re not going to be able to do that, but I’d like to put to you what Warren Buffett would be asking. Is this a cigar butt? This is a stock that’s gone from R1.30 down to 5 cents? Lindsay said earlier he wasn’t too sure if you were going to be around for much longer. So is this just one last puff or are you going to be a Havana and be smoking for years to come?
EILEEN WILTON: I’m absolutely confident that Gijima will be a Havana. We have put in a strategy that we spoke to the market about, and we are tracking very satisfactorily against that strategy in terms of customer retention, in terms of winning new customers, of getting our costs under control and our revenue growth. I’m absolutely convinced.
ALEC HOGG: Well, we look forward to talking in future…
* Alec Hogg is a Business Keynote Speaker, online publisher, writer and broadcaster
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