October 31, 2018 / 6:06 AM / 16 days ago

UPDATE 2-S.Africa's Sanlam to sell $583 mln stake to black investors, staff

* To sell 5 percent to staff, black investors

* Deal boosts black shareholding to 18 percent

* Share price up more than 3 percent (Adds analyst comment, shares, details)

By Tiisetso Motsoeneng

JOHANNESBURG, Oct 31 (Reuters) - South Africa’s biggest insurer Sanlam Ltd announced a series of deals on Wednesday to meet so-called affirmative action rules, including the sale of a 5 percent stake to black investors and staff for up to 8.6 billion rand ($583 million).

Companies in South Africa have to meet quotas on black ownership, employment and procurement as part of a government drive called black economic empowerment, or BEE, to address inequalities still prevalent years after the end of apartheid.

The plan aims to shift more of the mostly white-controlled wealth to the black majority. Companies with strong BEE credentials are more likely to win government contracts.

The transaction, which will raise the direct shareholding by black investors in Sanlam to 18 percent, will be priced at a 10 percent discount to the company’s share price within a range of 86 rand or 74 rand, it said. Proceeds will pay off a loan used to buy a Moroccan insurer.

The shares will be issued to Sanlam’s long-standing partner Ubuntu-Botho, a investment house whose owners include black women, youth and South African black tycoon Patrice Motsepe.

Sanlam’s staff, both black and white, who are not the beneficiaries of existing share schemes will also be offered the new shares.

A loan to finance the deal will be provided 50:50 by Sanlam and Standard Bank, the insurer said.

At 1030 GMT, Sanlam’s shares were up 3.7 percent at 74.58 rand.

The BEE drive has met some opposition. The mainly white Solidarity union, for example, criticised petrochemical giant Sasol for its share scheme.

Sanlam said it would also lend Ubuntu-Botho 2 billion rand to invest in Sanlam’s business units.

Ubuntu-Botho’s African Rainbow Financial Services unit will use some of the money to buy 25 percent of the insurer’s asset management arm and will launch a separate black-managed insurance firm together with Sanlam’s life insurance arm.

The deals may help to address calls from some of Sanlam’s institutional investors, particularly state-owned ones, for more diversity in the insurer’s business units.

“The thing that caught my attention is the participation of employees, but I would have liked to see it being broadened out a little to include policy holders and general public,” said Bright Khumalo, a fund manager at Vestact.

Sanlam was founded 100 years ago to help Afrikaners, white South Africans of mainly Dutch descent, who were impoverished by their defeat in the Anglo-Boer War. The firm has grown into one of Africa’s biggest financial services company, with operations in more than 33 countries.

$1 = 14.7545 rand Editing by James Macharia and Mark Potter

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