1. Background and rationale

2. Investment parameters and scope

2.1 Investment focus

Sabcap:

  • a)

    has a primary investment focus of owning a portfolio of significant equity interests in listed and unlisted companies with sound growth records or potential for growth that are expected to earn above average returns over a period;

  • b)

    has a secondary investment focus of holding cash, bonds, short-term investments, debt instruments and fund participations, as well as early-maturity, greenfield and special situation investments, depending on market conditions, availability of suitable opportunities, excess liquidity not invested in its primary portfolio and macro-economic cycles;

  • c)

    will also engage in corporate finance and acquisition and disposal activities with investees which may include making finance advances to previous, current and potential investee companies and their affiliates.

2.2 Sectors

Sabcap's primary equity investments will usually be in the industrial, services, IT and financial sectors, but other sectors will be considered if attractive opportunities arise.

2.3 Geographics

  • a)

     Sabcap wishes to hold a meaningful level of investments in international currencies either directly or indirectly through the foreign operations of South African investee companies.

  • b)

     Foreign investments held directly will usually be in businesses headquartered in the United Kingdom and Europe.

  • c)

     The location of foreign investments owned indirectly will be determined by the international strategies of the relevant investees as approved by Sabcap.

2.4 Size, spread and stage

Sabcap

  • a)

     aims to invest in good businesses with first-class management without being restricted by any required absolute size or level of percentage holdings;

  • b)

     may hold equity instruments that are small in percentage terms but where the Group is able to exercise influence through Board representation or shareholder agreements;

  • c)

     may hold majority or joint controlling interests but without direct management responsibility;

  • d)

     will not be constrained by any required balance between listed and unlisted holdings;

  • e)

     will not be constrained by any required sector spread;

  • f)

     will be unlikely to make new investments that exceed 15% of its portfolio or 25% of shareholders’ equity.

2.5 Other parameters

Sabcap

  • a)

     structures its investments such that each investment is free standing and ring-fenced as to risk;

  • b)

     usually invests in companies where key management has meaningful interests or in family managed businesses or together with chosen financial investors;

  • c)

    favours large or influential minority stakes in unlisted companies or in small/midcap listed companies;

  • d)

    usually procures that its CEO, other Sabcap Directors or chosen financial investors are directors of investee companies;

  • e)

     holds its investments without pre-determined realization periods but subject to the continual review of the quality of the underlying businesses and to any constraints or obligations in shareholder agreements;

  • f)

     may dispose of investments in the event of:
    • protracted periods of under-performance depending on the nature, sector and stage of the investments;
    • the number of core investments exceeding Sabcap's target portfolio spread (currently targeted as 10-12);
    • receipt of unsolicited offers at materially higher values than attributed by Sabcap;
    • availability of alternative investments with superior potential returns.

3. Growth targets

Sabcap’s target growth rates over three year rolling periods are:

Net asset value per share CPI + 10% p.a.
Dividends per share CPI + 5% p.a.


These may be changed by the Board if movements in macro-economic factors such as CPI, exchange rates, interest rates and rates of taxation make changes appropriate. The Board may also amend the dividend target in the context of free cash being utilized for share buy-backs from time to time relative to cash for dividends.

4. Categorization of transactions

Investment transactions undertaken by Sabcap will be categorized relative to Sabcap's market capitalization as required by the JSE and relative to its own net asset value for internal control purposes.

5. Shareholder approvals

  • 5.1.

    All transactions concluded in accordance with this Investment Policy, which will include but are not limited to the acquisition and disposal of investments or financial instruments, the advance to and repayment of loans by investees and third-parties, the provision of guarantees on behalf of investees and the underwriting of transactions undertaken by its investees, will be regarded as being in the ordinary course of business.

  • 5.2.

    Shareholder approval will consequently not be required for non-related party transactions of any size (including for the avoidance of doubt the enforcement of provisions in agreements relating to such transactions) to the extent such transactions are entered into in the ordinary course of business of Sabcap, as envisaged in paragraphs 2.1 and 5.1.

  • 5.3.

    Shareholder approval will be required for related-party transactions in accordance with the thresholds and requirements for such approvals contained in Section 10 of the JSE Listings Requirements, irrespective of whether such transactions are in the ordinary course of business or not.

  • 5.4.

    Shareholder approval will not be required for any purchase and sale transactions if these are as a result of the terms of shareholders' agreements which have been approved by Sabcap shareholders, or have been advised to Sabcap shareholders if the original transactions fall within the approved Investment Policy. It is intended that this will relate to come along, go along, tag/drag, pre-emptive, put and call, finance and subscription provisions contained in shareholder agreements between Sabcap and other shareholders in investees.

  • 5.5.

    Notwithstanding paragraph 5.4, the JSE Listings Requirements for shareholder approvals and communications will apply if the transaction is categorized as a reverse take-over in terms of Section 9.5(c).

  • 5.6.

    Any required notifications to shareholders or shareholder approvals may be effected or obtained at the time of the original transactions or subsequently.

6. Communication of investment transactions

  • 6.1.

    Communications with shareholders will be in accordance with JSE regulations for Category 1 and Category 2 transactions, except that:

    1. subject to paragraphs 2 and 5, no circulars will be required for any size transaction as long as the requirements of 6.2 or 6.3 are met, unless the transaction is categorized as a reverse take-over in terms of Section 9.5(c) of the JSE Listings Requirements;
    2. a Stock Exchange News Service (SENS) announcement will only be required for non-related party transactions less than 10% of market capitalization if they are regarded by the Board of Sabcap as price sensitive.

    For the avoidance of doubt, to the extent a transaction with a non-related party is concluded in the ordinary course of business and constitutes less than 10% of the market capitalization of Sabcap, such transaction will not be categorized in accordance with the JSE Listings Requirements for communication purposes but will be subject to the general obligations in the disclosure provisions of the JSE Listings Requirements.

  • 6.2.

    Notwithstanding the provisions of 6.1, the information required to be disclosed for a prelisting statement must be provided to shareholders if a transaction is a Category 1 transaction which results in an issue of securities that, together with any other securities of the same class issued during the previous three months, would increase the securities issued by more than the maximum threshold contained in accordance with Section 9.22 of the JSE Listings Requirements.

  • 6.3.

    All transactions will be summarized for shareholders in the interim and final results announcements and in the annual report.

7. Communication of investment policy

This Investment Policy and any subsequent changes will be published on SENS, published on Sabcap's website and included in the annual report.

8. Approval of investment policy

This Investment Policy and any future material changes must be approved by shareholders by way of ordinary resolution.

This Investment Policy has been approved by shareholders on May 24 2021