Questions you should ask about the Sanlam BEE deal

As we expect Sanlam to announce its BEE deal soon, it is time to start preparing ourselves and Sanlam to answer questions to help us decide whether we should invest in it or not. The dismal failure of the Sasol Inzalo BEE deal and other BEE deals should be lessons for all of us not to take part in BEE deals without asking questions. When we invest money, we expect to receive returns for the investment, especially after a long lock-in period. There is no protection afforded to Black participants by the BBBEE Act so when the deal fails, you are left penniless with no one to hold accountable.

Below are some of the key questions that we should be asking before we decide to invest or not to invest:

  1. The BBBEE Commission report indicates that Black female ownership of JSE listed companies is only 1,96 %, what is Sanlam doing to improve the empowerment of Black women?
  2. Sanlam had an estimated R580 mil exposure to Steinhoff. Investors pay performance fees for buying Sanlam funds – how is it that your investment analysts failed to pick up that things were not adding up with Steinhoff? Can we trust their analytical skills in the future?
  3. Ian Kirk, CEO of Sanlam, is reported to be saying that Sanlam wants Patrice Motsepe to lead the Black consortium for the BEE deal – going as far as saying he doesn’t want a whole lot of partners. Motsepe is worth over 1,9 billion USD and already owns 10,4% of Sanlam through Ubuntu Botho Investments. Is Sanlam interested in primarily empowering the already empowered?
  4. In the 1940s, Sanlam was the cornerstone of Afrikaner empowerment – it set up Bonsukor to mobilise capital for businesses owned by Afrikaners. Is Sanlam ready to be a vehicle for Black empowerment? What has it done for the majority of Black businesses, including Black financial advisors & brokers and its own policy holders?
  5. Sanlam is doing this deal partly to raise capital for the 3rd phase of the Morocco based Saham Finances acquisition. Can you explain more about Saham and what the prospects for success of Saham are? What if Saham fails – would BEE participants lose their money?
  6. Sanlam share price has been declining since the beginning of 2018 [it was R98 per share in February 2018 and has declined to a low of R67 in June], what if informs this decline? What if the share price continues to decline? Would Sanlam, like Sasol did, come back after the lock-in period with excuses that there is nothing for the BEE participants?
  7. Why would Sanlam expect its share price to recover significantly and be able to reward BEE participants, who will be giving their hard earned money to the company? On the income side, forecast for premium collections must be declining because the youth of SA are not buying insurance, high unemployment rates particularly youth unemployment, continuing retrenchments also have a negative effect on the ability of people to take insurance policies. On the expenditure side, insurance claims are increasing as a result of climate change related damage

Meanwhile if you want to invest in the FAANGs i.e. Facebook, Apple, Amazon, Netflix, Google and other leading technology firms, drop us an email

Share this knowledge with your loved ones