Johannesburg - South African insurance firms Santam and Sanlam yesterday announced that they had jointly acquired a 30 percent stake worth $375 million (R5.3 billion) in Morocco-based Saham Finances, which would double their African footprint.
Saham Finances, which had assets valued at $459m at the end of December, is the insurance arm of the Saham Group and has been acquired from leading investors in growth markets – the Abraaj Group, the International Finance Corporation and an IFC-managed fund.
“Saham is a strong business and complementary to both Sanlam and Santam in terms of the footprint in Africa. The price does look expensive although African assets were generally priced higher,” Grant Davids, an analyst at Nedbank Securities, said.
The announcement left Santam and Sanlam shares on the JSE almost unmoved by the close yesterday.
Share price
Sanlam shares ended unchanged at R63.09, which valued the company at R136.7bn, while Santam shares closed the day unchanged at R2.19, which put the company’s value at R25.2bn.
The buyers said Saham operated in 26 countries across north, west and east Africa and the Middle East, and was the largest insurer on the continent outside of South Africa.
Sanlam will make the purchase through its Sanlam emerging markets unit. Santam will fund its $93.8m share of the acquisition from sales of equity holdings and foreign cash resources.
As part of the deal Sanlam, which owned 60 percent of property insurer, Santam, was to take a 75 percent stake in a special purpose vehicle that would acquire Saham and the difference would be owned by Santam.
The transaction is expected to be completed in the first quarter of next year.
Heinie Werth, the chief executive of Sanlam emerging markets, said the group was happy with taking only a third of the Morocco-based Saham.
“We are taking a minority stake, we were impressed with management. We would rather look at ways to help. If we took a majority, I would be concerned about our resources; our approach is to work with the Morocco management and those in other countries,” Werth said.
The deal provides the Sanlam Group with a well-diversified portfolio that is largely complementary to its existing geographical footprint.
Sanlam expects an insignificant overlap between Saham and the Sanlam Group in countries where it operates.
“We think the overlap is too small. The potential overlap in Kenya was a topic during the discussions. Also in Ghana, Rwanda and Nigeria.”
* Additional reporting by Bloomberg
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