The services of the black economic empowerment company formed between financial services group Sanlam and a union consortium won’t be confined to the present members of the consortium, the parties said on Wednesday.
Sixty-percent of the new company, Break-thru, will be held by Basebenzi Investments which is the investment arm of the Food and Allied Workers Union (Fawu), with the balance being held by Sanlam.
But the parties say they will be talking to other organisations with a view to them joining the consortium.
However, the parties do admit that Fawu’s 100 000 membership — which will be expanding by a further 40 000 to 60 000 soon with the inclusion of more workers from the agricultural sector — is a fair base to start from.
“We see this as an entry point into a huge market — a huge market that is potentially available …and not insured,” one Sanlam executive commented.
“Break-thru is in line with our strategy of enhancing Sanlam’s profitability and reach by making investments that provide an appropriate real return on capital invested, as well as improving business volumes. This is a very exciting development and a win-win situation for both parties. Break-thru will empower Sanlam to break into new markets, especially in its employee benefits, investments and group solutions businesses, and allow it to expand the access to financial services to a broader market,” said Sanlam financial director Flip Rademeyer.
“Break-thru represents effective transformation as people on the shop floor will now be empowered to take charge of their financial futures. Break-thru will provide relevant financial services advice by being more accessible and better understanding the needs of a broad range of union members.
As shareholders, union members will also be able to share in the future success of this business,” said ambassador Chris Dlamini, CEO of Basebenzi and chairperson of Break-thru, said.
They said the formation of the new broad-based financial services company could be viewed as a positive response to the call by President Thabo Mbeki for the “peoples contract” to create wealth for equitable redistribution to the majority of the working people in particular and the people of South Africa in general.
Rademeyer said it was likely that the deal would lead to new products or some just being adapted.
“But you can say that there’s a new basis for doing business. We hope to create a whole new demand,” he said.
Dlamini added that while a lot of products in the market claimed to be accessible to the masses, this was not necessarily true.
“A lot of people don’t understand the products,” he said.
While Sanlam will initially hold 40%, Rademeyer says the group’s shareholding may dilute to a minimum of 25% in favour of the union consortium.
Sanlam will contribute the infrastructure, skills and training required to establish Break-thru in line with a detailed business plan and Fawu will bring its membership base as potential customers.
Break-thru will provide a one-stop financial service offering that will include employee benefits, group solutions, multi-management, home loans, personal loans, debt solutions and financial knowledge development. Break- thru is a revolutionary business model in that it will be focused on addressing the needs of the workers by developing appropriate solutions and utilising effective distribution channels to service their needs.
Sanlam will also become Break-thru’s preferred provider in respect of certain products and services, such as actuarial and investment consulting, member education and back-office services. – I-Net Bridge