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By Alec Hogg
Last Thursday I watched Sanlam’s CEO Johan van Zyl give a relaxed results presentation to 300 of the group’s top executives. The next set of numbers will be the responsibility of his deputy Ian Kirk who has big shoes to fill.
In 2003, Van Zyl was a surprise appointment when he was promoted to lead Sanlam after 18 months of running the short-term insurance subsidiary Santam. Then 46, he was a relative unknown having spent most of his career in academia. But whatever he learnt there was masterfully applied in the transformation of the hierarchical, narrowly-focused, under-performing life assurer.
Under Van Zyl’s direction, the Sanlam share price has risen from R6.26 on the day of his appointment to R67.20 today.
Broad progress was achieved, but perhaps the biggest single booster came from a decision in 2005 to sell Sanlam’s 124m shares in Absa (now Barclays Africa) – and apply the proceeds to buy back Sanlam’s own shares in the market.
Sanlam got R10.3bn for its Absa shares which it sold to Barclays at R82.50 each. Since then the Absa share price has risen 117%.
Between 2005 and 2008, those proceeds and a tad more – R11.1bn in total – was invested in Sanlam shares at a price of R15.72 a share. At the current price, and ignoring massive savings of servicing fewer shares, the “return” on that investment has been a staggering 327%.
Provided they’re done at the right price, share buybacks are the smartest way for any CEO to allocate capital. Van Zyl proved himself to be a master.
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