Sanlam earmarks R2bn loan for Ubuntu-Botho in BEE share increase deal
Share this article:
JOHANNESBURG - Financial services group and insurer Sanlam said on Wednesday that it plans to provide a R2 billion facility to its black-economic empowerment partner, Ubuntu-Botho or its subsidiaries, to support the execution of Sanlam's empowerment strategy to be a diversified pan-African financial services group.
This as Sanlam announced that it intends to issue an aggregate of five percent of its enlarged issued ordinary shares to a new broad-based group of empowerment shareholders and Ubuntu-Botho.
The proposed share transfer 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 while Ubuntu-Botho will participate in the remaining 20 percent.
As a result, Sanlam will increase its B-BBEE scoring to be a Level 1 contributor and will increase direct black ownership in Sanlam to over 18 percent and black economic ownership to over 35 percent, as measured in terms of the Financial Sector Code, placing Sanlam in a strong position in terms of empowerment.
Ubuntu-Botho Investments is Sanlam's empowerment partner and a financial services firm involved in asset management, private equity and insurance. It currently holds about 14.5 percent of Sanlam's issued shares valued at about R17 billion at present.
Ubuntu-Botho was founded by the billionaire businessman Patrice Motsepe who serves as deputy chairman of Sanlam and also owns black-owned financial services company, African Rainbow Capital
Sanlam said the empowerment strategy will be achieved by enabling Ubuntu-Botho to acquire, directly or indirectly, an interest in specific operating subsidiaries of the Sanlam Group and will also facilitate investment by Ubuntu-Botho in financial services companies that will be complementary to the broader Sanlam Group's vision and strategy.
Sanlam or any of its wholly-owned subsidiaries will also acquire a 25 percent stake in African Rainbow Capital financial services, which will assist it in the execution of its South African strategy.
Should these potential transactions at the operating business unit level be concluded, Sanlam expects to have broad-based black economic ownership in excess of 51 percent in these operating business units.
Motsepe said the partnership between Sanlam and Ubuntu-Botho has been one of the most successful empowerment partnerships in South Africa, creating value of over R14 billion for broad-based black shareholders when the first 10-year transaction matured.
"Sanlam and Ubuntu-Botho 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.
Ian Kirk, Sanlam group chief executive, said he firmly supported the government's assertion that the task of business is to build a country driven by enterprise and innovation and to develop an economy that is diverse, resilient and prosperous.
"The group's transformation drive over the past 25 years has demonstrated the importance of strategic partnerships. It has helped to create wealth for black shareholders and to support the creation of new black owned enterprises and has created value for Sanlam shareholders and other stakeholders," Kirk said.