Tuesday, May 30, 2023

Sanlam increases stake in BIHL

The country’s leading life insurance, pension and investment products group, Botswana Insurance Holdings Limited has confirmed that South Africa’s Emerging Markets Limited has acquired an additional 5.07 percent mid last month.

The transactions means Sanlam now owns about 14,254,443 shares in BIHL, bringing up its total shareholding to 58.29 percent of the total issued shares of BIHL. The group, which was incorporated in Botswana in 1975 and listed at the Botswana Stock Exchange in 1991, says the shareholding of 58.29 percent is the total Sanlam beneficial shareholding which have been split between African Life Assurance Company and SEM.

Both African Life Assurance Company and SEM are wholly owned subsidiaries of Sanlam, which is accordingly the ultimate beneficial shareholder. The company says its considers Botswana to be a key market for Sanlam and SEM’s increased shareholding in BIHL is in line with its stated strategy of deepening its relationship with BIHL and it will continue to work with BIHL in growing the business and delivering value to clients and broader stakeholders in Botswana. Although in the past there were concerns that decisions at the blue chip company are made in South Africa just like other companies that operate in the country, South Africa’s leading fund management firm (Sanlam) had in the past disputed that it does not run the day to day operations.

The tussle for power at BIHL led to a sudden departure of its former Chief Executive Regina Sikalesele-Vaka. She felt hard done by BIHL majority shareholder, Sanlam which now owns 58 percent of the group’s total shares. Vaka’s complaints which came at a time when BIHL had accumulated excess capital in the region of P1 billion, included among others, issues surrounding the management of such capital. The former Chief executive felt that the declaration of special dividend fulfilled the immediate gain to all shareholders but not consistent with building a sustainable company.

At that point, Sanlam is said to have made a requirement to the BIHL board to approve a systematic release of the group’s excess liquidity by declaring special dividends. However, on the other hand, the former Chief Executive however maintained that the removal of capital would weaken BIHL’s balance sheet and ultimately weaken it as a company. The Group’s operating profit increased by 19 percent to P277.3 million from P232.7 million, with operating profit by the life business alone increasing by 15 percent due to good operational earnings from all the business lines by the end of December 2013.

At the same time core earnings increased by 15 percent from P270 million to P310 million, while profit attributable to equity holders within the period under review increased by 26 percent to P492.5 million. Still in 2013, BIHL’s embedded value increased by 21 percent from P2, 700,868 billion at the end of 2012 to P3, 260,161 billion at the end of 2013. This saw a resultant increase in return on embedded value, from 19 percent in 2012 to 24 percent in 2013.


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