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Full steam ahead for the long-awaited Sanlam share give-away
The policyholders are resoundingly happy and the scene is set,
writes LUCIENNE FILD
ALL that stands between you and your free Sanlam shares is a stamp of approval from the Cape High Court. A resounding yes vote this week by Sanlam policyholders paved the way for Sanlam's demutualisation and listing on the stock exchange. Just over one million policyholders - or 59% of the 1.8-million members eligible to vote - cast their votes. Of the policyholders who voted, 997 378 (99.5%) voted yes, while 3 406 (0.3%) voted no, and 1 592 (0.2%) spoilt their votes. The majority of policyholders used the postal voting form. Although not required by law to hold a vote, Sanlam decided it would proceed with the demutualisation proposal only if at least 75% of members who voted, did so in favour. The results were announced by Marinus Daling, executive chairman of Sanlam, at the assurer's extraordinary general meeting at the luxurious Nederburg Conference Centre in Paarl on Thursday. Sanlam had chosen a venue with a capacity of 4 500 - but only 374 policyholders turned up, many of them being Sanlam staffers. Disappointing? Well, Sanlam breathed a sigh of relief that things ran smoothly. After the meeting, Daling said he expected a yes vote based on the positive feedback received from policyholders at countrywide roadshows. Nevertheless, he was gratified that such a high number of eligible policyholders took the trouble to vote. "Obviously our members are not suffering from policyholder apathy." While policyholders are, judging by their vote, keen on their free shares, there is no telling what these shares will be worth when Sanlam actually lists. Sanlam estimates that if it had listed on July 31 this year, its shares would have been worth R7 to R9 each. But since then the market has dropped by more than 40% and the value of the shares could be even lower when Sanlam lists. Daling, however, is not unduly worried by the market crash and the high volatility. "It's better to have the crash behind us than ahead of us," he says. Daling says there are three value drivers behind Sanlam which are sure to make it a good investment. First, the market is very low at present and can only go up. Second, Sanlam's performance over the past two years wasn't what it should have been, but, says Daling, Sanlam is working hard to change that. Third, demutualisation will add value to Sanlam. According to Daling, the international experience has shown that companies which have demutualised have, almost without exception, proven to be good investments. Unlike Old Mutual, Sanlam has not established a meaningful overseas presence. But while analysts expect Sanlam to clinch a deal with a global player once the demutualisation process is complete, Daling says there are no such plans until Sanlam has brought its local operations up to scratch. No overseas partner has been identified and there have been no talks with potential overseas partners, he says. "First we need to get the organisation fit, and only then will we look for global opportunities to earn even better returns for shareholders," he says. Also, unlike Old Mutual, Sanlam's primary listing will be on the Johannesburg Stock Exchange. Old Mutual will probably list on the London Stock Exchange. Daling says since the majority of Sanlam's business is carried out in SA, it is only right for Sanlam to list on the JSE. "It would be artificial for us to have our primary listing in London, when 99% of our business is in SA."
At the meeting, policyholders let Daling off lightly - only two raised questions. In response Daling assured the policyholders that they would not be worse off after demutualisation than before, and explained that Sanlam employees were allocated free shares (the allocation represents 0.25% of the total share allocation) for the ultimate benefit of both the company and policyholders. The high court will consider Sanlam's demutualisation proposal this Thursday. If Sanlam is given the go-ahead, policyholders eligible for free shares will be offered additional shares at a discount price at the end of this month. A share application form will be sent to you, together with a mini prospectus and details of the discount. Sanlam will list on the Johannesburg and Namibian Stock Exchanges, probably at the end of November. This means that you'll be the proud owner of at least 300 Sanlam shares in about six weeks, provided you are eligible. If you were the legal owner of a Sanlam policy or member of an individual retirement annuity fund at midnight on March 31 this year, and provided you did not lapse or surrender your policy before or on this Thursday (October 15), you will receive a minimum of 300 free shares. If you partly surrendered your policy or reduced your premium before Thursday, your share allocation has probably been reduced. But if you qualified by Thursday, no matter what you do with your policies now, you will get your free shares.
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