Financial-services group Sanlam [JSE:SLM] announced on Wednesday that it was moving forward with plans to issue 111 million new ordinary shares - 5% of its ordinary share capital - to an entity held by new and existing broad based black economic empowerment shareholders.
This would “substantially broaden the base of Sanlam’s empowerment beneficiaries,” it said.
At 11:29 on Wednesday its shares were trading 5% higher at R75.40 a share, up 4.8% on the day.
Sanlam said that 80% of the transaction would benefit new beneficiaries including professional black women, rural and urban poor black women groups, black youth and black youth groups, black business partners and broad based black groups, and employees of the Sanlam Group.
The group’s existing anchor empowerment shareholder Ubuntu-Botho, would receive 20% of the transaction.
In a separate transaction, it is also proposing to grant a R2bn facility to Ubuntu-Botho, which would enable “Ubuntu-Botho to invest in certain Sanlam subsidiaries”.
In a statement the Cape Town-based group said that, as a result of the B-BBEE transaction, it would be classed as a Level 1 Contributor and would increase direct black ownership in Sanlam to over 18%, and black economic ownership - which combines direct and indirect ownership - to over 35%.
“This will place Sanlam in a strong, market leading position in terms of empowerment,” it said.
The group said the issuance of new shares would also strengthen its balance sheet.
“The proceeds from the B-BBEE transaction will be used to redeem the short-term debt facilities recently raised in acquiring the remaining 53.37% shareholding in Morocco-based SAHAM Finances,” it said. “This will enable Sanlam to retain its balance sheet flexibility and strength, in line with its prudent balance sheet management strategy.”* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER