Innovative transformation deal secures local and global buy in
12 Mar 2019
In October 2018, Sanlam announced plans for a B-BBEE transaction aimed at strengthening their South African operations and positioning the Group for growth through enhanced economic empowerment credentials.
The transaction, which was finalised in March, has also further strengthened Sanlam’s Level 1 B-BBEE scorecard rating in accordance with the updated Financial Services Charter.
Delivering a bespoke solution
While the requirements and benefits of a B-BBEE transaction are well understood by South African shareholders, Sanlam also has a significant international shareholder base, concentrated primarily in the United States, the United Kingdom and Europe. Positioning the merits of the transaction and its importance in supporting the growth of Sanlam’s business in South Africa was therefore key to securing the requisite 75% shareholder approval. As such, Sanlam required a bank with a strong understanding of the South African landscape, coupled with the global corporate broking reach required to explain the transaction to international shareholders. Standard Bank’s long-standing relationship with Sanlam, combined with our thorough understanding of their business made us their obvious choice of partner in this regard.
“Standard Bank’s unique combination of local balance sheet; a wide African footprint; strong advisory capabilities and global reach, and most of all, a professional and passionate team with exceptional work ethic, allowed us to appoint them as sole advisor and funder.” - Heinie Werth, Sanlam CFO
Standard Bank’s role in the deal
As well as being Sole Transaction Advisor and Funder on the deal, we were also Sole Preference Share Subscriber, Equity Secured Funder, Sole Bookrunner on the Delta Hedge execution and JSE Sponsor.
While the transaction was jointly funded by Sanlam and Standard Bank, we facilitated the funding off our balance sheet via a combination of preference shares and secured equity funding, optimising the funding mix for the subscription of newly issued Sanlam shares by the B-BBEE investment vehicle.
In light of the long lead time between the announcement in October 2018 and the closing of the transaction, as well as the fact that the economics in relation to the share issuance portion remained exposed to market risk, the issue price of the equity was purposefully structured to permit a share subscription within a defined price range, rather than at a fixed price. This flexibility optimised the economic impact of the transaction for both Sanlam’s existing shareholders as well as the new B-BBEE shareholders.
Enabling growth and transformation
The transaction, which positions Sanlam’s South African operations for strong growth, showcases Standard Bank’s proven ability to partner with clients to deliver complex and bespoke transactions.
Thanks to a seamless collaboration across advisory, corporate broking, equity capital markets, debt and global markets, we were able to provide a fit-for-purpose solution that will enable Sanlam to meet its transformational objectives and create long-term value.