SOUTH AFRICA – Sanlam Investments has committed R2.25billion (US$132m) of its own capital to seed three funds with the core objective of preserving and creating jobs, in a drive to mobilise further capital from like-minded investors set on re-igniting economic growth.
Sanlam invested R250m (US$14.67m) in the Investors’ Legacy SME Debt Fund; R1bn (US$5.87m) in the Investors’ Legacy Corporate Debt Fund and R1bn (US$5.87m) in the Investors’ Legacy Private Equity Fund.
The target size for the funds are R750m (US$44m) for the SME Debt Fund, R2bn (US$11.74m) for the Corporate Debt Fund and R2bn (US$11.74m) the Private Equity Fund.
Sanlam’s goal is to mobilise further capital from like-minded investors who want to join in accelerating the much-needed growth of the economy, post-lockdown.
It envisages the typical investor to be an institutional investor which, while likely to have a requirement to target a market-related financial return, has a strong alignment with the impact themes of economic growth; job preservation and creation; and social inclusion.
Investors can choose to allocate to each fund individually or invest in a blend of the three impact strategies.
“Sanlam’s commitment puts us in a great position to start supporting businesses relatively quickly and we are aiming for all three funds to have started deploying or reached a first close by August 31, 2020,” Todd Micklethwaite, Head of Alternatives Distribution at Sanlam Investments.
The three impact funds named the Investors’ Legacy range share the common goal of backing companies negatively affected by COVID-19, but which have a strong likelihood of producing sustainable cashflows after the pandemic should they receive the required financial support.
Each fund focuses on a different part of the market – SMEs, mid-market and large corporates – and will provide financing in the most appropriate form, whether it be in the form of loans or equity investment.
“We actively seek out opportunities to support the recovery of South Africa in a purpose-led, society-focused, and investor-centric way. Particularly in times of crisis, we can empower other companies to create and sustain jobs, which has a real, meaningful flow-through to economic growth, and at the same time offer investors a good return on their capital,” Nersan Naidoo, Sanlam Investments CEO, said.
According to Micklethwaite, typical ticket size differs for each fund and is as follows: the Investors’ Legacy SME Debt Fund – typically R20-50m (US$1.17-2.93m); the Investors’ Legacy Corporate Debt Fund – typically R50-100m(US$2.93-5.87m); the Investors’ Legacy Private Equity Fund – typically R100-200m(US$5.87-11.74m).
The Investors’ Legacy funds range is consciously aligned with the United Nation’s Sustainable Development Goals, particularly those goals focused on eradicating poverty, reducing inequalities and promoting economic growth.
The capital will be invested with the intention of generating a social impact, while also looking to deliver returns that allow investors to achieve their long-term financial objectives.
“Each of the funds have a well-developed pipeline of good quality businesses that have been impacted by the pandemic,” commented Micklethwaite.
He added that the SME debt fund is planning to invest in an FMCG business, whereas the Mid-Market PE fund is looking to provide expansion capital to a manufacturing company; and the Corporate Debt fund is planning to invest in a food manufacturer.
“As a financial services provider with our roots firmly in South Africa, we are keenly aware of our responsibility to support South Africa’s economic recovery and launching the Investors’ Legacy range is one such action we have taken,” Ian Kirk, CEO of Sanlam, said.
In the past few months, we have made various contributions to support clients and communities in South Africa and across the African continent.
These include substantial contributions to South Africa’s Solidarity Fund and to the African Union; premium holidays, premium reductions and other such relief actions to clients; and we have provided funds for our businesses across the continent and other markets to make similar contributions in the countries where we operate.”
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