Sanlam raises empowerment stakes. The insurance giant is selling an additional 5% stake to black investors including anchor empowerment shareholder Ubuntu-Botho for between R7.4 billion and R8.6 billion.

Sanlam has announced a new empowerment deal that will raise black ownership of the group to above 35%, placing it in a "marketing-leading position".

The insurance group is selling a 5% stake to black investors, including professional women, rural and urban women groups, youth groups, business partners and employees. Anchor empowerment shareholder Ubuntu-Botho, which first bought a stake in Sanlam in 2004, will select the participants and beneficiaries of the Beneficiary Trusts, with input from Sanlam. It will also take a fifth of the 5% stake through a subsidiary.

Sanlam said it would issue 111.3 million new shares to the investors. The price will be determined after all the conditions have been met and is likely to cost between R7.4 billion and R8.6 billion after a 10% discount to the prevailing share price at the time. Sanlam will use the proceeds to redeem short-term debt facilities incurred as partial funding to acquire its 53.4% stake in Morocco's SAHAM Finances. It said this would enable it to retain its balance sheet flexibility and strength.

While its combined direct and indirect black ownership will be in excess of 35%, it said direct black economic ownership would be over 18%.

In a separate transaction, it's granting a R2 billion loan facility to Ubuntu-Botho, which will be invested in some of the group's SA subsidiaries to help boost empowerment at an operational level.

Sanlam said while the recent purchase of an increased stake in SAHAM Finances had strengthened its position in Africa outside of SA, some 70% of its net result from financial services was still generated from SA and would continue to be for the foreseeable future.

The proposed transactions will support Sanlam to grow and consolidate its position in this important market, whilst also building on the Sanlam philosophy of mutually beneficial partnerships in pursuit of shareholder value creation," Sanlam said.

Its shares rose 3.3% to R74.26 yesterday.

yeah @sanlam is doing a bad job by not including the broader public in this deal. This is their 2nd chance to make things right but they're avoiding going the extra mile. Really disappointing that it's a business build on policy holders and those too have been totally ignored!

-- Brillant el Matador aka Dividend Papi (@briteless) October 31, 2018