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Sanlam BEE deal delivers R15bn in value

Cape Town - The Ubuntu-Botho empowerment deal, the biggest BEE deal yet in SA, has created approximately R15bn in value from an initial investment of R1.3bn in the ten years to December 2013, Sanlam [JSE:SLM] announced this week.

All debt and interest on debt were fully settled at the end of the 10-year contractual period, the diversified financial services firm said in a statement.

Ubuntu-Botho is led by business mogul Patrice Motsepe, who invested R200m in cash of his own money from the outset.

Set up in April 2004, the deal saw the Ubuntu-Botho consortium take an initial 8% stake in Sanlam. This shareholding was extended to include broad-based groups consisting of trade union companies, religious organisations, women and youth groups as well as nine provincial companies from all the provinces in South Africa, representing approximately 700 shareholders.

By December 31 2013, this equity stake had grown to 14% through a combination of share buybacks and the reclassification of an additional 66.5 million deferred shares to ordinary shares.

Sanlam and Ubuntu-Botho have entered into renewed talks to extend the partnership. Details are expected to be announced during the course of 2014.

Sanlam Group Chief Executive, Dr Johan van Zyl, attributed the group's strong financial performance over the last ten years in part to the Ubuntu-Botho deal.

“Since the deal was set up, Sanlam’s tight strategy and strong financial performance has seen the Group’s share price rise from R7.65 in 2004 to around R52 today. Ubuntu-Botho has been a major contributor towards this performance because it has helped us remain competitive, attract and retain employees of the highest calibre and penetrate new parts of the market,” said Van Zyl.

For Motsepe, the transaction offered diversification into the financial services industry and also allowed for the empowerment of many black individuals and broad-based groups.

He said there are huge benefits in the growth and success of a black middle class and black entrepreneurs. "We must encourage more black people to start, run and own their own businesses. Our hope is that as many of our beneficiaries as possible will not sell their shares in Ubuntu-Botho but will remain invested to get the long-term benefits of our new partnership with Sanlam.”

A fifth of the R15bn value created through the Ubuntu-Botho deal has been earmarked for development projects linked to education, women and youth upliftment and partnerships with religious organisations, trade union organisations, traditional authorities and poor rural and urban communities.

Said Van Zyl: “The R3bn in the Trust will be a base from which investment will be made into education and infrastructure for education."

He said long term sustainable empowerment comes from education.


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