How HCI’s Insiders Cashed In – While Workers Paid the Price

In a story that spans nearly three decades, the arc of Hosken Consolidated Investments (HCI) reads like the rise of a visionary black empowerment empire (BEE).

But beneath the headlines about “empowerment” and “transformation” lies a deepening irony – the very workers who helped build the company have repeatedly been left behind.

At the centre of this story is the South African Clothing and Textile Workers’ Union (SACTWU), the second-largest union in the country. Once HCI’s largest shareholder and foundational BEE partner, SACTWU has seen billions in potential value slip away – much of it ending up in the hands of HCI insiders, led by long-time CEO Johnny Copelyn.

As SACTWU's leaders talk of protecting workers, the evidence suggests they’ve been outplayed – or outmanoeuvred – in a ruthless game of corporate control.

A Long Partnership with Uneven Outcomes

The relationship between HCI and SACTWU is rooted in the democratic era. Copelyn, a former union leader himself, helped engineer HCI's early deals on behalf of the union. He turned it into one of the largest investment groups controlled by black South Africans.

But over the last decade, the fortunes of insiders and those of workers’ representatives have sharply diverged. While HCI management has reaped millions – even billions – through a series of structured deals, SACTWU’s own stake in the company has shrunk by half, often sold off at fire-sale prices.

The results are staggering: according to analysis by Aktiv Investment Management, SACTWU has missed out on an estimated R7 billion in potential value through three key transactions alone. Meanwhile, top executives and associated entities – often the direct counterparties in those very deals – have benefitted handsomely.

Even now, as HCI's share price trades at a 50%-plus discount to its own asset value, insiders continue tightening their grip – and SACTWU appears to be playing along.

Three Deals that Tell the Story

The first was the 2012 spinoff of Niveus Investments. HCI created the company, placed valuable assets into it, and invited shareholders (including SACTWU) to “exchange” HCI shares for Niveus. Copelyn and entities linked to him took full advantage. SACTWU did not.

Over the following eight years, Niveus delivered extraordinary returns – an internal rate of roughly 34% – while HCI’s own stock went backwards. The union could have made nearly R700 million had it participated. Instead, it wound up with almost nothing when Niveus was taken private in 2020.

The second episode is even more striking. In 2013, SACTWU sold roughly R1.8 billion worth of HCI shares back to the company at R112 per share. But instead of clean cash, most of the proceeds (76%) were tied up in risky, illiquid exposure to HCI’s media assets. That investment rapidly soured, and by the time SACTWU exited, it had lost more than R1 billion.

The third – and perhaps the most egregious – was SACTWU’s sale of its entire holding in Montauk Renewables. The union exited the unlisted subsidiary for just R132 million. But management had the foresight to keep buying. When Montauk listed on the Nasdaq in 2021, those same shares were worth over R5.5 billion. Migrating global energy policies were about to supercharge Montauk's value – and insiders caught the windfall. Workers did not.

A New Deal – Same Story

The latest chapter began on 4 July 2025. HCI announced that it would repurchase 6.5% of its own stock from SACTWU – nearly 5.3 million shares – at just R131 per share, far below intrinsic value. In exchange, SACTWU agreed to take a low-yielding property portfolio and cash.

Two months later, HCI quietly amended the deal. Instead of simply retiring the bought-back shares, they set it up so that SACTWU would hold a controlling stake in the company that holds the shares. The catch? Those shares will keep voting rights, and HCI insiders can buy them back later at the same bargain price – whenever they want.

In other words: SACTWU’s supposedly “sold” shares can now be used to keep voting control within friendly hands – without ever paying a proper control premium.

Who Really Benefits?

Copelyn personally – through direct and indirect entities – controls close to 20% of HCI. After this latest transaction, insiders may effectively control as much as 45% of voting power.

For workers represented by SACTWU, the picture is bleaker. They now hold illiquid assets with low returns – while their union leadership narrows its influence year after year.

This raises serious governance questions. Why would SACTWU repeatedly weaken its own leverage? Why sell shares at a 50-60% discount while investment firms, including ours, stand ready to buy blocks at higher prices?

A Call for Accountability

At a time when South Africa’s political economy is under pressure – and unions play a critical role in ensuring economic justice – the story of HCI reveals a dangerous contradiction: The flagship BEE partnership between HCI and SACTWU appears, in practice, to have become a mechanism to enrich insiders at the expense of workers.

If empowerment is to mean anything beyond slogans, SACTWU must urgently re-evaluate its strategy. It must demand transparency, appoint new representatives to the board, and consider all avenues to unlock fair value – not just for insiders, but for the members it claims to represent.

Otherwise, HCI insiders may soon walk away with the whole company – and workers will once again be left with the scraps.

Zetler is a director at Aktiv Investment Management