Sanlam Investments launches three South Africa-focused funds

Posted on: 11 June, 2020 at 6:09 PM

Sanlam Investments has committed R2.25 billion (about $131.7 million) of its own capital to seed three South Africa-focused funds.

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.

Economists estimate that, depending on how long the lockdown continues, South Africa could have 3 to 4 million people losing their jobs, pushing the unemployment figure to close to 50%.

The Reserve Bank revised its GDP forecast to a deeper contraction of the economy at -7.0% for 2020, while some private sector economists suggest that -10% is more likely.

Sanlam Investments chief executive Nersan Naidoo says, “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.”

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.

The management teams will invest into commercially-viable businesses that struggle to access the necessary liquidity in the midst of the pandemic, and without which they might not survive.

Sanlam’s goal is to mobilise – apart from its own seed capital of R2.25 billion – further capital from likeminded 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.

Each of the three funds will be managed by a team with an outstanding track record. The Investors’ Legacy SME Debt fund is run by a female-led team with a 10-year track record of successfully delivering on their funds’ investment objectives (with no negative months).

Alongside it, the Investors’ Legacy Private Equity fund is managed by a seasoned team and a network of commercial experts.

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