Sanlam and Ubuntu-botho BEE partnership delivers

Set up in April 2004, the deal saw the Ubuntu-Botho consortium take an initial 8% stake in Sanlam. This shareholding was extended to include broad-based groups consisting of trade union companies, religious organisations, women and youth groups as well as nine provincial companies from all the provinces in South Africa, representing  approximately 700 shareholders. By 31 December 2013, this equity stake had grown to 14% through a combination of share buybacks and the reclassification of an additional R66.5m deferred shares to ordinary shares

The success of the transaction has encouraged Sanlam and Ubuntu-Botho to enter into renewed talks to create new opportunities for continuing the success of the partnership and ensuring that as many South Africans as possible benefit and are positively impacted upon by this partnership.  Details are expected to be announced during the course of 2014

Sanlam Group Chief Executive, Dr Johan van Zyl, said the transaction had exceeded expectations and Sanlam's successful performance over the past 10 years had contributed to and had been buoyed by the success of the deal.

"Since the deal was set up, Sanlam's tight strategy and strong financial performance has seen the Group's share price rise from R7.65 in 2004 to around R52 today. Sanlam has strongly outperformed its peers to deliver consistently strong results which allowed the deal's value to flourish. Ubuntu-Botho has been a major contributor towards this performance because it has helped us remain competitive, attract and retain employees of the highest calibre and penetrate new parts of the market" said Van Zyl.

"From the outset we knew the success of the deal would lie in basing it on sound business principles and goals and I think that is why it has worked so well. Mr Motsepe invested R200m in cash of his own money and right there the deal was set apart from many others. Our partner was as deeply invested in making it a success as we were"he said.

Van Zyl and Motsepe personally visited all the nine provinces in South Africa in 2004 to engage with the various broad-based shareholders, including trade unions (SADTU and NEHAWU), religious groups, entrepreneurs, small and micro business owners, women and youth groups who would all become the beneficiaries of the deal.

Several business leaders who were identified as being able to make a direct impact on empowering small business were also among the beneficiaries. A number of non-executive directors from Sanlam and senior black Sanlam staff members were also included.

For Motsepe, the transaction offered diversification into the financial services industry. The deal also allowed for the empowerment of many black individuals and broad-based groups. At the time, Motsepe had a choice of financial services groups to partner with, but selected Sanlam because of its history of empowerment. "Sanlam has contributed substantially to Afrikaner growth and upliftment and I wanted to learn and partner with them so that we could make a contribution to the upliftment of all South Africans," says Motsepe.

Motsepe strongly believes in creating opportunities for all South Africans: "We have to persuade and convince all our people of the huge benefits for them in the growth and success of a black middle class and black entrepreneurs. We must encourage more black people to start, run and own their own businesses. Our hope is that as many of our beneficiaries as possible will not sell their shares in Ubuntu-Botho but will remain invested to get the long-term benefits of our new partnership with Sanlam."

A key component of the deal was the Sanlam Ubuntu-Botho Community Development Trust which was earmarked for developing and empowering blacks living in poor rural and urban communities. R3bn of the value created has been earmarked for development projects linked to education, women and youth upliftment and partnerships with religious organisations, trade union organisations, traditional authorities and poor rural and urban communities.

Van Zyl says that the Trust has already made some contributions, for example, to the Nelson Mandela Foundation. "The R3-billion in the Trust will be a base from which investment will be made into education and infrastructure for education. Long term sustainable empowerment comes from education. It is the concept of not merely giving people fish but teaching them how to fish. We will use the successes of the transaction to meaningfully contribute to education in South Africa"

Motsepe concluded by saying: "Our objective was always to form a long term partnership with Sanlam which would benefit all our stakeholders and make a contribution to the development and growth of our economy."

Van Zyl concluded by saying: "Besides this significant milestone in our 95-year history, we continue to embrace all transformation and empowerment opportunities which this month saw us obtaining a verified Level 2 Contributor status in terms of the Financial Sector Code."