Sanlam Investments wants to help create an ideal SA by 2033

Sanlam Investments is committed to becoming Africa’s leading sustainable investment house.

While the company’s impact aspirations are more broadly targeted towards the UN sustainable development goals, its Alternative Investments business focuses on three main pillars: job creation, reducing inequality and driving improved climate outcomes through strategic investing. 

Mervyn Shanmugam, CEO of Alternative Investments at Sanlam, says asset managers are able to make a positive impact on the world by how they allocate capital and actively manage investments. “We have our eye firmly on the future. Embedded in every conversation, strategy and new idea is what our world could look like in the future.”

“We imagine what we’d like SA and Africa to look like in the next five to 10 years: more quality jobs; far less inequality; robust and effective public-private partnerships which drive sustainable infrastructure development; a buoyant SME sector with access to flexible and affordable finance; and a just transition to clean energy.”  

Shanmugam says while the government plays a big role in reducing economic inequality through the redistribution of the country’s resources, private capital can support this process. “We can channel funding to segments of society that need it most when traditional funding fails. That’s why effective partnerships between the public and private sector are so important.”

Alternative investments act as powerful vehicles that can enhance returns for investors as well as diversify a portfolio. “And they can do much more than that. Because alternative investments allow more control by the asset owners and closer relationships with their investee companies or projects, they offer a real opportunity to create tangible, measurable societal and environmental impact.”

The introduction of impact funds into private markets has enabled fund managers to think and behave differently when creating funds. “Previously, the considerations would be driven solely by return imperatives. Now, we’re able to include solutions to specific environmental or social problems in the fund construction process. Investors in these alternative asset classes are now also able to understand the impact that these opportunities can deliver by compelling their fund manager to measure and report on both impact and financial outcomes.”

“Given the extreme inequality in our country, SA needs to embrace impact investing to reorganise capital in a way that uplifts our people and creates a world where they can grow and retire with dignity.”

Sanlam Investments’ journey to achieving its goals is already well under way

The Sanlam Investors’ Legacy Range is one of the company’s flagship impact initiatives. It launched at the onset of the Covid-19 pandemic to preserve jobs in the short term and create additional jobs over the next decade. To date, more than R4bn has been committed to job creation mandates to help activate economic growth in our country. A third of this amount has already been approved for investments that have the potential to improve the lives of more than 35,000 people.

One of the main channels for driving this job creation ambition is the company’s mid-market private equity fund. This fund has made substantial investments in the Cavalier Group, Absolute Pets and Q-Link, which is expected to create more than 550 direct and 1,700 indirect jobs.

The Cavalier Group, which operates a fully integrated red meat value chain, primarily employs women from surrounding township areas and has created over 100 jobs since the investment in December 2020.

Absolute Pets, SA’s largest specialist pet food retailer, has added 33 new stores since the fund’s investment in April 2021. This achievement is well above the 15-store a year target and has resulted in the creation of 140 new jobs. The majority of its employees (92%) are previously disadvantaged, with almost 70% being female and more than 65% under 35.

Q-Link, a leading provider of payment application software, aims to grow its highly skilled, specialised and predominantly female employee base by almost 30%. 

Catalysing economic growth and addressing social inequality have been focus areas of the company’s SME Debt team. The team has concluded more than 100 successful deals since launching over a decade ago, helping local entrepreneurs with one of their biggest barriers to success: finance.

Earlier this year, the business launched an SA SME Debt Fund in conjunction with the Eskom Pension & Provident Fund, focused on financing black-owned businesses across sectors, but prioritising manufacturing and agro-processing.

Through climate fund managers, Sanlam Investments’ strategic partnership with Dutch development bank FMO, the business is responding to the climate crisis by raising, structuring and managing a series of blended finance vehicles each focused on investing into developing economies in important thematic areas of climate change mitigation and adaptation.

Climate Investor One is using the $950m raised to finance and develop wind, solar and run-of-river hydro projects, while Climate Investor Two is $180m shy of its $1bn target which is being used to finance projects in the water, sanitation and ocean sectors.

Additionally, the Sanlam Investments Sustainable Infrastructure Fund launched in September 2021 and is investing in SA infrastructure projects that drive economic growth, market development and job growth, with an emphasis on environmental sustainability. The fund has R1bn in investor commitments to date.

Sanlam Investments is making its investments matter. Make your investment count by visiting the company's Alternative Investments webpage for more information on the fund. If you are ready to invest, email Sanlam Investments.  

This article was paid for by Sanlam Investments.

^{Disclosure: Collective investment schemes are generally medium to long-term investments. Please note that past performance is not necessarily a guide to future performance and that the value of investments/units/unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available from the manager, Sanlam Investments. Additional information of the proposed investment, including brochures, application forms and annual or quarterly reports, can be obtained from the manager, free of charge. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has the right to close any portfolios to new investors to manage them more efficiently in accordance with their mandates.}