BEE scheme flourishes

2014-07-18 00:00

SANLAM said yesterday it had generated R15 billion for its empowerment shareholders over 10 years to become, arguably, the most successful empowerment scheme to date.

And, Sanlam Group market development chief executive Temba Mvusi told The Witness yesterday that the pot of money is likely to fund the start of South Africa’s first large, black-owned financial institution.

He was in Durban on a campaign to update Ubuntu-Botho shareholders of their investment.

Economic empowerment schemes by large companies have attracted much criticism because many have failed financially, while some only managed to enrich a few privileged shareholders and did not benefit a broader community.

The Ubuntu-Botho deal — a partnership between Sanlam and business leader Patrice Motsepe — matured on December 31, 2013 with R15 billion in value created, from an initial investment of only R1,3 billion.

Among the broad-based shareholder community in the scheme that included women, churches, trade union and education groups, nine were companies, one from each province, with 60-100 beneficiaries each.

Also among the KwaZulu-Natal beneficiaries were 12 schools and two large church organisations.

“The deal achieved the success it did because it was foremost a business deal,” Johan van Zyl, group chief executive officer of Sanlam said in a statement.

“BEE should not just be about wealth redistribution or earning points on the BEE scorecard,” he said.

Sanlam had approached the partnership as it would any other business deal — it was subjected to the usual due diligence reviews, to ensure both parties would realise significant value.

“It had an advantage over others of its kind in that Patrice personally invested R200 million to kick-start the transaction, which meant the deal was not as highly geared as many others are,” said Van Zyl.

During the 10 years of the scheme, Sanlam’s share price rose from R7,65 in 2004 to around R56 today.

Mvusi said going forward, the idea was not to dissolve the scheme, although, of course, shareholders would have the option to sell their shares.

“We want to now go to the core to create a black-controlled entity. We want to move to the next level of empowerment. There are no sizeable black-owned companies in financial services,” said Mvusi.

In terms of the scheme, R3 billion in value was created for the Community Development Trust, to be allocated to education and educational infrastructure projects for the “poorest of the poor”, said Mvusi.

He said the formation of new black-owned large financial services group would also be of benefit to Sanlam, and that further details on the way forward would be worked out in the months ahead.

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