Sanlam financially supports investment in newly-listed ARC Investments for its empowerment shareholders

07 December 2017Sanlam

Sanlam has announced that it reached an agreement and received the relevant approvals to fund a company jointly owned (JV) by Ubuntu-Botho Investments (UBI) and the Sanlam Ubuntu-Botho Community Development Trust (the Trust) for an amount of R500 million. This amount assisted the JV to acquire shares in the newly-listed African Rainbow Capital Investments (ARCI) on market-related terms (Funding Transaction).

African Rainbow Capital (ARC) is a black-owned and controlled company and has transferred 49.9% of its interests in financial services companies (excluding its interest in Sanlam) and 100% of its interests in non-financial services companies to ARCI. It has retained a 53% interest in ARCI.

An investment in ARCI offers access to ARC’s investment portfolio and future investments in companies across various industries, as well as an opportunity to participate in the growth and value creation of a company from a relatively early stage.

“Given the success of the Sanlam and UBI partnership and this important milestone in our key empowerment partners’ history, Sanlam believes the Funding Transaction will enable the Trust and UBI to benefit from the future growth in ARCI. Therefore, the Funding Transaction will not only extend the benefits of the partnership to UBI’s shareholders, but also to the beneficiaries of the Trust,” says Sanlam Group CEO, Mr Ian Kirk.

Through the Trust’s investment in UBI, beneficiaries of the Trust already gain from annual Sanlam dividends of more than R160m, which goes into education, among other initiatives.

“This Funding Transaction shows our confidence in and commitment to our partnership with UBI, which we have always viewed as a long-term partnership with an anchor shareholder of more than 13 years now. Sanlam will continue to seek appropriate opportunities to cooperate with UBI to enhance our Broad-based Black Economic Empowerment (B-BBEE) position,” Kirk added.

Arguably the most successful B-BBEE deal in the financial services sector, the Sanlam and UBI deal was established in 2003. At the end of the initial contractual period on 31 December 2013, the deal had created a staggering R15 billion in value after the settlement of all external debt.

Sanlam and UBI agreed to extend the period of the partnership beyond 2013 and UBI currently holds a 14% equity stake in Sanlam.

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