BMFI: Driving Transformation Through Investment

Since its establishment in 1996, Black Management Forum Investments (BMFI) has carved out a reputation as a leading impact-driven investment manager, blending the pursuit of solid financial returns with a firm commitment to transformation in South Africa. Emerging from the Black Management Forum (BMF) – itself a pioneering organisation focused on advancing black leadership in corporate South Africa – BMFI was created to turn advocacy into tangible outcomes by strategically investing in businesses, shaping management teams, and building long-term value for both shareholders and society.

Nearly three decades later, BMFI has grown into a respected player in the country’s investment landscape. With a portfolio currently valued at around R650 million, spanning both listed and unlisted assets, the organisation has set its sights firmly on the R1 billion mark within the next two years. The scale of that ambition underlines both confidence in the business model and the urgency of the mission: to ensure black professionals occupy leadership roles across corporate South Africa, driving inclusive growth.

Reflecting on those formative years with Enterprise Africa, CEO Zandisile Mabuya points to the role of pioneers who laid the foundation. “BMFI was started by the non-profit organisation, the BMF, in 1996. The pioneer among the group of founders was Mzolisi Diliza who is also the founder and CEO of Strategic Partners Group (SPG). SPG is a BBBEE partner in the Bombela Concession Company which is responsible for managing the Gautrain. Coincidentally, SPG was the first investment for BMFI and we now have a shareholding of just over 27%.”

From that start, BMFI has steadily built out a diverse portfolio across sectors and asset classes. “BMFI, as the investment arm for BMF, has grown its portfolio and that now includes other companies such as Computershare, Cable Tapes Africa (CTA), and Rosslyn Development Hub as unlisted investments, and Nedbank, Raubex, and AdvTech Holdings as listed investments. Since 1996, it has grown steadily to reach a current value of around R650 million. My job is to grow to around R1 billion in the next two years,” Mabuya explains.

INVESTING WITH PURPOSE

Unlike traditional investment firms where profit is the sole yardstick, BMFI measures success through a dual lens: returns and transformation. The two are not mutually exclusive, argues Mabuya, but mutually reinforcing.

“BMF has a mandate to transform the management structures of companies around South Africa and see more black managers in place, especially in listed companies. More than that, the mandate is to assist with development of these companies. There is a theme around social impact, but it is very specific. We use these companies for capital appreciation and profit, but also to allow for the transformation agenda to shine through as we infuse these companies with astute, properly qualified, properly experienced managers,” he says.

BMFI’s approach is deliberately active. Instead of being silent shareholders, its representatives play a visible role at board level, shaping governance, introducing new funding strategies, and embedding strong managerial frameworks. “Not all companies require new people – Rosslyn Hub has a great team that is doing a good job. However, we are not passive investors – we are very active and we use our board chairs that come with our investment very well. The people who represent us are suitably qualified and add value when they are there,” adds Mabuya.

Partnerships have been critical to the journey. Sanlam has brought both financial firepower and deep expertise, while longstanding relationships with firms such as SPG showcase how BMFI leverages its networks for growth. “Ours has been a good story. Sanlam is a 30% shareholder with us and we have been able to leverage from Sanlam’s rich heritage but also the expertise from their teams, especially the private equity team. That partnership has been extremely helpful in growing the business,” Mabuya details.

Among all of BMFI’s portfolio companies, one stands out as a vivid case study of this investment-with-impact philosophy in practice: Cable Tapes Africa.

A TURNAROUND STORY

Acquired in 2018, Cable Tapes Africa (CTA) is a manufacturer of tape used in power and communication cables. Its products, while niche, are critical components in electricity distribution and telecommunications infrastructure – two industries at the heart of Africa’s development. CTA today commands an estimated 80% share of the South African market, but this dominance was far from assured when BMFI first got involved.

“CTA manufactures tapes that are used in heavy and medium current power cables, instrumentation cables and fibre optic cables. The company was attractive because it dominates the market with significant market share in South Africa. It was a company that needed to be infused with new management and needed to be transformed in terms of governance protocols,” explains Mabuya.

CTA’s transition illustrates both the challenges and opportunities that come with investing in founder-led businesses. CTA CEO Buntu Quwe recalls the situation bluntly. “When BMFI invested, we had two divisions – cables and packaging. The cables division was the attraction, but BMFI was investing into a business run by founder entrepreneurs and there was no governance structures in place and they were running the business on their own,” he said.

By 2022, the business faced mounting financial strain. Quwe joined at a time when BMFI was even considering impairing its investment. “I realised that there was an identity crisis. There was also an issue with management of inventory and business processes. There were also issues with operational efficiencies which were just not there,” he notes.

The recovery required a blend of financial discipline, operational fixes, and cultural reset. Cashflow challenges, inefficient procurement, and supplier debts stretching beyond six months all needed urgent attention. “We were ordering raw materials from China, Japan, and Europe. We then had to convert it and sell to customers, and we were not efficient at all,” said Quwe.

His first step was renegotiating with suppliers and customers to buy time and restore credibility. “I went to suppliers and customers. I reiterated the position of CTA as a single entity and I made fresh arrangements with all of them which allowed us time to align internally. We extended payment terms with suppliers and we accelerated invoice settlements with customers through various settlement discounts,” he explains.

Internally, CTA revamped processes: new organisational structures, better production planning, tighter maintenance schedules, and stricter compliance protocols. “We also had to combat the idea that CTA was a certain net margin which did not justify to have shareholders within the business. We needed to increase efficiencies in operations, and we did so. We streamlined processes and everyone knows what is being produced and when. We have also ensured that we understand our place in the value chain, beyond our customers to their customers,” Quwe says.

The results have been striking. Margins climbed from on an average of 43% per annum while revenues jumped by 55% over the period of three successive financial years. Stock management is leaner, production cycles are smoother, and CTA is once again positioned as a market leader.

GROWTH PLANS

With its turnaround complete, CTA is now looking ahead. Proactive customer engagement is a central theme. “Our principle is that if a customer contacts us, it means we are late. We are proactively managing our customer base to ensure our efficiencies are lean,” Quwe says.

Innovation is also front of mind, with the company preparing for the growth of fibre optics and other new technologies. “The dominant space for us right now is medium voltage and high voltage power cables but we do serve the low voltage, fibre optic cables and instrumentation cables. We see the fibre optic side growing aggressively in the future and we are investing in innovation to ensure we are a part of our customers’ plans going forward,” he confirms.

Localisation of supply chains is another priority. “We are looking at the potential for manufacturing raw materials from scratch rather than bringing them in from elsewhere. If we can produce locally, we can take that through the value chain and eventually products will reach Eskom for deployment here in South Africa,” Quwe added.

This localisation strategy dovetails with regional ambitions. “This will also help us grow in sub-Saharan Africa where there is big demand but little supply of these products and they are importing from China, Europe or India. Longer-term, we are also eyeing countries such as Egypt, Morocco, Nigeria as an African supplier of products that meet a growing demand for power and connectivity,” he predicts.

BMFI’s long-term vision extends well beyond CTA. “We are sector agnostic and we have mainly been invested in equities in unlisted companies,” explains Mabuya. “We do have a listed portfolio but we have introduced another asset class and we see opportunities in real estate with social impact. We are looking at opportunities in purpose-built student accommodation and we are working on something right now which we are about to close.”

The firm is also introducing new funding models to accelerate growth. “Instead of writing equity cheques, we will introduce a debt portion. Our opportunity in the new asset class will be funded in this way. There is no debt on our balance sheet, our investments are not geared, and so we are looking at introducing a funding mix to accelerate growth,” he highlights.

Regionally, BMFI is preparing for expansion into SADC countries and, eventually, further afield. “If an opportunity arises now, we will certainly look at it, but we must remember that our mandate is for investment to have an impact in South Africa,” Mabuya reiterates.

BUILDING FOR THE FUTURE

BMFI’s trajectory underscores the power of blending commercial acumen with transformation imperatives. Its ability to step into businesses at critical moments, provide governance, and unlock growth has proven a durable formula. The CTA story is evidence of how that model can save, stabilise, and scale enterprises in ways that contribute to South Africa’s development.

As the organisation prepares for its next phase, internal capacity-building will be as important as external expansion. Strengthening governance, scaling up its team, and preparing for a more complex portfolio are all part of BMFI’s roadmap. “CTA is changed from a company that had weak financial performance to a company which is very successful, and we are proud to showcase because its performance in the market has been great,” Mabuya reflects.

With its strong partnerships, experienced leadership, and unwavering mission, BMFI is positioning itself as a central player in South Africa’s transformation journey. The R1 billion target is not just about scale; it is a symbol of the organisation’s ongoing role in reshaping the country’s corporate landscape.

For investors, businesses, and society alike, BMFI offers a compelling model of what impact-driven investment can achieve: delivering financial returns while driving the structural changes needed for a more inclusive economy. From its first investment in SPG to the turnaround of CTA and its ambitions in real estate and regional markets, BMFI continues to prove that profit and purpose can, and should, coexist.