Sanlam Ltd. (SLM), South Africa’s second-largest life insurer, is the second-biggest investor in a floating-rate note which may default following the liquidation of an engineering company.
The Cape Town-based company invested 236 million rand ($24 million) in Bacarac Trading 142 (Pty) Ltd., specifically created for the purpose of investing in First Strut RF Ltd.’s 925 million rand of floating-rate notes, according to Sanlam and court documents seen by Bloomberg News.
The “major part” of the investment is being held in Sanlam’s own corporate-debt portfolio, Kobus Moller, the company’s financial director, said in an e-mailed response to questions. “This exposure is adequately provided for. Policyholders are not affected.”
Investec Plc (INVP)’s banking unit loaned First Strut, trading under the name First Tech Group, 240 million rand and its investment arm invested 435 million rand in the First Strut bonds. FirstRand Ltd. (FSR), South Africa’s second-largest bank, loaned 200 million rand to First Strut while its Rand Merchant Bank unit invested 50 million rand in the notes. Prudential Portfolio Managers bought 51 million rand of the debt and Fairtree Capital (Pty) Ltd. took 131 million rand.
First Strut was placed in provisional liquidation on July 16 following failed business rescue proceedings that started six days earlier. The company’s winding down came after the murder of Chairman Jeff Wiggill last month in Soweto, southwest of Johannesburg. Wiggill’s shooting was a contract killing, the Johannesburg-based newspaper Star reported last week, citing the bail application of one of the men arrested for his killing.
Court documents filed in Pretoria on July 16 by Leslie Matuson and John Louw, who were appointed as business rescue practitioners, said that Sanlam had purchased 263 million rand of the First Strut securities.