Sanlam poised for BEE

Chief executive Ian Kirk yesterday said the acquisition of the remaining stake in Saham Finances was progressing well. Photo: David Ritchie/African News Agency (ANA)

Chief executive Ian Kirk yesterday said the acquisition of the remaining stake in Saham Finances was progressing well. Photo: David Ritchie/African News Agency (ANA)

Published Sep 7, 2018

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JOHANNESBURG – The recently crowned biggest JSE listed life insurance group Sanlam is on course to issue 5 percent in new shares to a black economic empowerment vehicle to raise funds for its multibillion-rand acquisition of Morocco-based Saham Finances.

Chief executive Ian Kirk yesterday said the acquisition of the remaining stake in Saham Finances was progressing well.

“Our plan remains that part funding for this transaction will be through a 5 share issuance to a BBBEE vehicle, which will enhance Sanlam’s direct black shareholding to a leading position, placing us in a good position to attract increased institutional business in South Africa,” Kirk said.

Kirk earlier this year reportedly said the group wants Patrice Motsepe to lead the black consortium for the BEE deal. 

Motsepe already has more than 10 percent interest in Sanlam through Ubuntu Botho Investments.

Phumelele Ndumo, the managing director of Thuthuka SA, said the dismal failure of the Sasol Inzalo BEE deal and other BEE deals should be lessons not to take part in BEE deals without asking questions.

“Sanlam is doing this deal partly to raise capital for the third phase of its Morocco-based Saham Finances acquisition. Can you explain more about Saham and what are the prospects for Saham's success? What if Saham fails – would BEE participants lose their money?" Ndumo asked.

Earlier this year, Sanlam announced that it would buy the rest of Saham Finances in a deal worth $1 billion (R15.3bn) – its largest deal to date. The deal was expected to be concluded before the end of the year.

The group and its subsidiary Santam first acquired a 30 percent stake in Saham in 2016, and last year purchased a further 16.63 percent stake. 

“The jury is still out on the Saham acquisition. It appears that a full price was paid for Saham. I am sceptical that the investment in Saham will earn returns well above its cost of capital over the long-term,” said Asief Mohamed, chief investment officer at Aeon Investment.

The group yesterday reported a 12 percent increase to R5.1bn in the six months ended June, while normalised headline earnings surged 10 percent to R4.9bn.

However, the group’s new business volumes declined by 1 percent in the period and its net fund inflows declined 9 percent to R17.2bn.

Kirk said the group was satisfied with the performance. 

“Our continued focus on managing operations prudently and diligently while executing on our strategy enables us to consistently deliver value to our stakeholders.”

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