JOHANNESBURG - Sanlam slumped more than 8percent on the JSE yesterday after the financial services group announced it had raised R5.7billion through a share placement.
The shares closed 8.78percent lower at R83.57 on the JSE yesterday as the group told investors that it had placed a total of 65.5million new ordinary shares at a 5percent discount with institutional investors to fund the acquisition of insurance company Saham Finances.
Sanlam group chief executive Ian Kirk said the acquisition of 100percent of Saham would enable Sanlam to have an even more meaningful presence across sub-Saharan and North Africa, in line with the group’s strategy.
“The success of this placing indicates the significant investor confidence in Sanlam, following a long period of consistent delivery on our strategic priorities, and is evidence of the renewed confidence in South Africa as well. We believe our investment in Saham, once completed, will add value to all our stakeholders, and it is a critical milestone in our centenary year as we look to sustain our growth and performance in the years ahead,” said Kirk.
Sanlam announced earlier this month that a subsidiary of its joint venture with insurer Santam would buy the remaining 53.37percent stake in insurance company Saham Finances for $1.05bn (R12.23bn). Saham has operations in 26 countries across north, west and east
Africa and the Middle East. The transaction is subject to a number of conditions, including various regulatory approvals.
Bradley Preston, the head of listed investments at Mergence Investment Managers, said the drop in the Sanlam stock could be attributed to a combination of the impact of the bookbuild and the overall market weakness. “One would have expected the stock to fall close to the bookbuild price due to the impact of weak global market overnight,” said Preston.
Ron Klipin, a portfolio manager at Cratos Capital, said the JSE had been under pressure on the back of weak global markets with US President Donald Trump's perceived actions triggering a trade war.
“This has turned into a negative sentiment, driving down equity prices with the potential of causing a downturn in global growth. In addition, offshore sellers of bank shares have been taking profits after a substantial rise in prices,” said Klipin.