Sanlam, Santam in major transaction to expand footprint in Africa
In one of the Sanlam Group’s biggest transactions yet, Sanlam and Santam are set to enter new markets having reached agreement to acquire a 30% stake in Morocco-based Saham Finances which operates in a total of 26 countries predominantly across Africa and with a presence in the Middle East.
Sanlam and its short term insurance subsidiary Santam are pleased to announce that they have concluded agreements to jointly acquire an effective 30% stake in Morocco-based Saham Group’s insurance business, Saham Finances S.A. (Saham Finances) for a purchase consideration of US$ 375 million.
Sanlam and Santam will acquire 30% of the share capital of Saham Finances from The Abraaj Group (Abraaj) and the International Finance Corporation (IFC), which is a member of the World Bank Group, and the IFC African Latin American and Caribbean Fund (IFC ALAC Fund), which is managed by IFC Asset Management Company. The Saham Group already holds the majority 62.5% shareholding in Saham Finances.
The transaction is still subject to regulatory approvals and the acquisition by the Saham Group of the remaining stake (7.5%) held by Abraaj, IFC and the IFC ALAC Fund in Saham Finances. On completion of the transaction, Sanlam Emerging Markets (SEM) will hold 75% and Santam 25% of the stake through a special purpose vehicle.
The transaction is set to expand the Sanlam Group’s footprint across the African continent with entry into new attractive markets for the Group. These include, among others, Cote d’Ivoire, Gabon, Senegal and Cameroon in Francophone West Africa; the Arabic-speaking North African country of Morocco and Lebanon in the Middle East; and Angola in Lusophone Southern Africa.
Saham Finances, one of the largest insurers in Africa, is the market leader in most of the 26 countries in which it operates, writing mostly non-life business. It has a network of over 650 branches, a staff complement of more than 3000 people and a consolidated turnover of over USD1 billion.
It is the largest insurance group in Africa outside of South Africa and has seen steady growth particularly in Africa because of its ambitious and deliberate acquisition strategy. To this end, the company has recently made several acquisitions in Nigeria, Kenya, Rwanda and Angola, among others.
The company, which operates mainly in the insurance, assistance and health administration sectors, has an extensive presence in Africa and the Middle East. It offers a unique and complete service, responding to the expectations of private individuals, professionals and companies.
Says Sanlam Group’s Chief Executive, Mr Ian Kirk: “We believe that Africa presents us with a unique, long-term growth opportunity. This partnership with Saham Finances will provide the Sanlam Group with a significant competitive advantage as no other insurance company can offer the same regional network to the professional and corporate market. This transaction, which is aligned to our diversification strategy, will enable us to access a diversified blend of new high-growth insurance markets in North and West Africa, which are largely underpenetrated.
“We are confident that the continent’s growing population, improved political landscape and the evolving financial markets and regulatory environment support our vision of being a leading Pan-African financial services company.”
Both groups boast individual product strengths with Saham Finances being strong in general insurance, medical insurance and assistance businesses. Sanlam, on the other hand, has strengths in life and non-life specialist businesses as well as asset management.
SEM’s Chief Executive Officer, Mr Heinie Werth said: “Although established just 20 years ago, Saham Finances is a well-established business with an impressive footprint across 26 countries in which they have achieved many market leading positions. We are particularly pleased about the well-diversified portfolio which is complementary to our geographic footprint. The transaction will significantly bolster our non-life exposure across the continent.
“We look forward to a solid partnership with Saham Finances, which is a business steeped in values that are common to ours. We will deepen our relationship with Saham Finances as we explore future opportunities together,” Werth said.
Commenting on the transaction, Santam’s Chief Executive Officer, Mrs Lizé Lambrechts said: “The combined expertise and experience as well as technology and other infrastructure of Sanlam, Santam and Saham Finances will add tremendous value to all our clients across the continent.”
Saham Finances Managing Director, Mr Raymond Farhat commented: “Saham Finances will strengthen its development through a partnership with Sanlam, a leading South African financial services group. Our partnership with Sanlam is an important step to expand our mutual geographical presence, ensuring a unique African footprint. Our aim is to combine our know-how to capture the expected strong growth opportunities. This partnership clearly makes Saham Finances and Sanlam the leading insurance groups across Africa.”
IFC Director Mr Mouayed Makhlouf said: “IFC is pleased to support this transaction which promotes cross-border South-South investments and partnerships across Africa.”
Partner and Regional Head of Middle East and North Africa for the Abraaj Group, Mr Ahmed Badreldin added: “We have enjoyed a strong partnership with Saham Finances over the time of our investment and, together, helped grow the business into the leading Pan African insurance player providing diversified products and services to a strong consumer base. We believe the business is extremely well positioned to capture further market share in the African continent and are confident that the investment and support provided by Sanlam Group will further accelerate its growth trajectory.”
Sanlam and Santam expect the transaction to be completed in the first quarter of 2016.