Ten years ago, three entrepreneurs left their corporate jobs to start Lebolex, a fleet-management business that recently became a Business Partners Limited client.
Mthokozisi Shangase, co-founder, co-director and CEO of Lebolex, says the business is a level 1 BBBEE 135% contributor, wholly black owned and with a 52% shareholding by black women. Lebolex is also fully RMI accredited. But that is not what sets it apart in the highly competitive and specialised retail motor industry. “For us it is all about superior customer service and taking calculated risks to expand into new areas when it makes sense,” says Mthokozisi. While fleet management is its core function, Lebolex dabbles in workshop management, mechanical repairs and rental management to diversify its income streams.
Mthokozisi started his career in the automotive industry with a small company that managed short-term rentals for Transnet. “The two years I spent there was a valuable training ground because I got involved in everything – from finance and procurement to disposals. It prepared me for starting and running Lebolex.”
Bonginkosi Shangase and Maria Mogane, managing director and executive director respectively, both had longer careers in fleet management than Mthokozisi when they joined forces to establish Lebolex. Mogane’s area of expertise is compliance, while Bonginkosi had been a fleet manager – both inhouse and as an employee of Fleet Africa – for around 20 years before taking the entrepreneurial plunge.
Mthokozisi had rubbed shoulders with Business Partners Ltd in the past when Lebolex had looked into buying properties and when the directors were considering acquiring a panel beating business. But it was only when Lebolex needed working capital to fulfil a large, new government contract that a financing relationship was formed.
The contract is for the supply, delivery and fitment of tyres for vehicles belonging to government entities across the country. Understanding that suppliers have become reluctant to deal with government given its poor supplier management and payment record, the National Treasury had structured a so-called transversal contract. The principle is that departments and municipalities can apply to be serviced under the contract, provided they meet Treasury’s requirements and agree to honour the terms of the national contract. Treasury issues a single tender for all the relevant entities and awards portions of it to different suppliers.
“This means that suppliers have recourse to Treasury when the entity they deal with fails to pay,” says Mthokozisi. “When this opportunity came our way, we were very excited, but also knew we needed the right financing partner to support us.” Despite it being underwritten by the National Treasury, the banks were not interested in touching a government contract, leaving Mthokozisi and his partners in need of an alternative.
In Business Partners Ltd, Lebolex not only found an alternative, but a true partner in business. “The deal they gave us is very fair and the performance-based fee it includes does not bother us because we know what we are capable of,” says Mthokozisi. “We had to put up one of our properties as collateral, so it wasn’t a decision we made lightly, but the deal terms convinced us.”
The contract Lebolex secured with Business Partners Ltd’s support, could yield between R200 million and R800 million over its three-year period. “The SAPS fleet alone is well over 90 000 vehicles,” notes Mthokozisi. He adds that the business is likely to not only regain its pre-COVID-19 employment figures but exceed them, growing from its current 11 employees to as many as 35 over the coming months.
“For us as directors the time has come to step back from admin and project management and focus more on the strategic aspects of the business; the support from Business Partners Ltd will help us to do that.”
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