Billionaire Patrice Motsepe is set to score big in Sanlam’s multi-billion expansion of its broad-based black economic empowerment (BBBEE) shareholding from 18 percent to 35 percent.
The insurer yesterday announced that it was planning a package of transactions aimed at strengthening its South African operations and positioning the company for growth over time through enhancing its empowerment credentials and building on its long-standing partnership with Motspe’s company Ubuntu-Botho Investments (UB)
Sanlam said it would issue an aggregate of 5 percent of ordinary shares to a new broad-based group of empowerment shareholders and UB.
The group said the issued shares to new and existing BBBEE shareholders would be worth nearly R8.6 billion. “The proposed transactions will increase economic inclusion as new broad-based beneficiary groups focused on black women and youth as well as Sanlam’s South African employees, will participate in 80 percent of the new shares to be issued,” Sanlam said. “UB will participate in the remaining 20 percent.
Sanlam shares rose 3.28 percent on the back of the news to close at 74.26 on the JSE on Wednesday.
The group said the transaction would put its empowerment position on a strong footing. It said it would also strengthen its balance sheet.
“The proceeds from the BBBEE transaction will be used to redeem the short-term debt facilities recently raised in acquiring the remaining 53.37 percent shareholding in Morocco-based Saham Finances,” Sanlam said. It said it also planned to provide a R2bn facility to UB to enable it to invest in some of its subsidiaries.
It said African Rainbow Capital Financial Services (ARC FS), one of Motsepe’s other companies, would be roped in to assist in the execution of its strategy. “Therefore, in addition to providing the UB facility, there is an in-principle agreement that Sanlam or a wholly-owned subsidiary of Sanlam will, subject to definitive agreements, acquire a 25 percent stake in ARC FS from African Rainbow Capital.
Sanlam’s market capitalisation has increased to R118bn from R27bn when the empowerment transaction was announced in 2004.
Chief executive Ian Kirk said the group strategy was based on its support for the government’s rebuilt economic programme that has emphasised enterprise and innovation development.
“We believe the proposed transactions are well aligned to the national agenda and will build on the highly successful strategic partnership which Sanlam and UB have forged over the past 14 years,” Kirk said.
The group expected the transaction to boost its BEEEE ownership above 51 percent. Motsepe said the transaction would cement Sanlam’s relationship with UB.
“Sanlam and UB have demonstrated that combining strategic relationships between black investors and established business with broad-based black empowerment and entrepreneurship can create long-term value as it delivers both commercial benefits and meaningful economic transformation,” Motsepe said.