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The Sanlam Investors’ Legacy Range marks a strong first close

Sanlam Intelligence
| Investment Outcomes

Sanlam Investments recognises that it plays a significant role within the South African economy. We are incredibly proud to have contributed to the considerable transformation of the asset management industry with the conclusion of the African Rainbow Capital (ARC) transaction to establish one of the largest broad-based black-empowered asset management companies in South Africa. Our initiatives to mobilise capital to help save and create jobs in our impact-driven Investors’ Legacy Range also form part of our purpose-driven journey to secure a sustainable future for all South Africans.

Investors’ Legacy Range

At the height of the pandemic in July 2020, Sanlam Investments launched the Investors’ Legacy Range, with the specific objective of preserving South African jobs. The range consists of three impact funds, the SME Debt Fund, Mid-Market Private Equity Fund and Corporate Debt Fund.

The funds share a common goal of supporting companies negatively affected by COVID-19 that have a strong likelihood of producing sustainable cash flows after the pandemic. Each fund focuses on a different part of the market – small and medium enterprises (SMEs), mid-market and large corporates – and will provide financing in the most appropriate form, either loans or equity investment. Our emphasis is on creating inclusive, fair, and quality jobs that will impact livelihoods and communities.

We are incredibly proud of the impact we have already made within these funds. It is indeed gratifying to provide you with an update on these funds, which have emerged from their first close with some distinct markers of what lies in wait in the future.

Alongside the funds’ investment objectives, the Investors’ Legacy Range seeks to positively impact 27 000 jobs over the life of the funds. This impact will be felt in the short term by strengthening businesses in challenging economic circumstances and over the life of the funds as growth capital contributes to economic stimulation and job creation. The funds will also connect previously underserved segments of the population with job opportunities and improve job quality by raising employees’ productivity, earnings, and well-being.

SME Debt Fund update and team appointments

To date, the SME Debt Fund has completed its first round of transactions and has committed R110 million in debt relief capital to three South African small businesses, preserving 630 jobs. These businesses are expected to create an additional 356 jobs.

Dr Lumkile Mondi joined in January 2021 as independent chairperson of the Investment and Impact Committee for the SME Debt Fund. Dr Mondi will further strengthen the committee, bringing new insights and deep experience from his extensive background in development finance, including over a decade of understanding and supporting SMEs in his role as an executive at the Industrial Development Corporation (IDC).

Private Equity Fund update and team appointments

The Private Equity Fund has also completed its first two transactions. The first is with Cavalier Group, an integrated AAA-grade red meat supplier to Woolworths, to the value of R231 million. It will preserve over 1 400 jobs in the food processing industry.

This transaction also won our team the Deal of the Year award in the large-cap acquisition category at the inaugural SAVCA Private Equity Conference Awards. The Deal of the Year award recognises private equity acquisitions and exits that stood out during the preceding year.

We also recently signed the sale agreements on the second transaction and are now awaiting the successful conclusion of the sale agreements’ suspensive conditions. The anticipated pay-away is 31 March 2021. This transaction will preserve 300 direct jobs and 950 indirect jobs over the investment time horizon. The investment pipeline remains strong, with the team aiming to conclude at least two other transactions in 2021.

Our private equity business has been bolstered by the addition of Naledi Gule, who joined as an investment associate with responsibility for investment execution and management, and Lusanda Jakavula, who brings an additional depth of knowledge and new perspectives to the fund’s Investment Committee. We are excited by what Naledi and Lusanda will bring to the business. Their appointment reaffirms our commitment to improving our decision-making bodies’ gender and racial diversity, which we believe will enable us to deliver better outcomes for our investors.

Corporate Debt Fund update

On 6 November 2020 the Central Credit Committee approved a credit rating for Transflow, which will facilitate a R350 million pay-away through the fund (R300 million for CCM and R50 million for SIM third-party clients) in the first quarter of 2021. Transflow is related to the SA Taxi division of Transaction Capital.

The Fixed Interest team remains stable with Mokgatla Madisha (head: Fixed Interest) and Ockert Doyer (head: Credit) at the helm.

To us, people matter most, and every single job in South Africa counts. The job losses in 2020 have been catastrophic, and we are committed to doing all we can to reignite economic growth and preserve and create jobs both directly and indirectly.

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