Kagiso Trust Case Study

1. INTRODUCTION

a) The Business and Sectors the Company Operates in.

Kagiso Trust was established in May 1985 when funded from the European Union & rescue’s Special Programme for Support of Victims of Apartheid. It grew from a small unit to a national operation and from 1985 to 1994 the Kagiso Trust had a readily accessible source of donor funding, mainly from the European Union. Though it was difficult to access these funds post 1994, In order to secure a sustainable source of funding and to leverage existing investments, Kagiso Trust Investment (KTI) was formed, which it capitalised with the modest reserves it had built up at the time and with a $5m loan from JP Morgan. KTI used these funds to acquire the radio and publishing assets which gave birth to Kagiso Media. It is now centred on three vital group structures being the Exhibitions & Events, Information Services and Solutions, and lastly Broadcasting (view addendum). These pillars eventually brought KTI its knees selling its assets but Kagiso Media kept the unit for future potential while increasing consumer confidence.

b) Key Challenges, Opportunities, Threats Facing Business and Industrial Environment

Despite remarkable growth, one of the serious challenges for Kagiso Media is that it is a small company with tightly held shares. This placed serious limits on future growth. Finance director Pieter Jacobs admitted that institutional investors were no longer interested in the share because they could not get big-enough volumes. The main buyers of the share were individual investors who could then monitor the company’s performance. While competition is tough the idea was to expand its market share at upper-income groups, but open to all is the best choice. With challenges come opportunities like expanding further into Cape Town, the Durban Motor show through Kagiso Exhibitions and beyond the boarders especially East and West Africa through licensing rights of the Independent Communications Authority of SA's (ICASA). But back at home while the new privilege had offered Kagiso Media opportunities, there were also drawbacks. Their competitor East Coast Radio in KwaZulu Natal were already settled since there was no immediate competition and claiming a 20% increase in women listeners and 28% increase in black listeners. This did not stop Kagiso, they purchased the entire station with others proportionally owned by shareholders. However, the tables almost turned in 2001 when New Africa Investments (Nail) came into the picture because their shareholders (Kagiso) felt the rules governing broadcasting ownership restricted growth.