On 11 March 2019, Sanlam issued 111,349,000 new ordinary shares to SU BEE Investment SPV as part of a Broad-Based Black Economic Empowerment (B-BBEE) Transaction.
- The shares were subscribed at a price of R70.00 per share, representing a discount of 9.88% to the 3-day volume weighted average price.
- The B-BBEE Transaction was funded through a combination of First Ranking Preference Shares issued by Funding SPV to Standard Bank and Second Ranking Preference Shares issued to Sanlam’s subsidiary, Sanpref.
- One year after the B-BBEE Transaction, the operating environment deteriorated due to factors such as the Covid-19 pandemic, resulting in equity market volatility and a decline in the Sanlam share price.
- The value created for beneficiaries of the B-BBEE Transaction is dependent on the net equity position of Funding SPV, which is currently negative.
- Due to the negative impacts on the Sanlam share price, it is likely that the Funding SPV structure may be unwound after its maturity in March 2024.
- To unwind the Funding SPV, a subsidiary of Sanlam will acquire the First Ranking Preference Shares from Standard Bank.
- Sanlam will explore alternatives to orderly unwind the Funding SPV and may consider repurchasing Sanlam shares from Subscription SPV.
- The proposed transaction involves U.R.D. Beleggings, a subsidiary of Sanlam, acquiring the First Ranking Preference Shares from Standard Bank for R2,421 million.
- The transaction aims to mitigate the negative impact of potential forced share disposals and contribute to an orderly unwinding of the Funding SPV by the maturity date in March 2024.