Sanlam buys 53% of BrightRock

Sanlam has clinched the first major deal on home soil in two years, agreeing to acquire a majority stake in smaller insurer BrightRock for up to R707m. Sanlam’s life insurance subsidiary will purchase 53% of the needs-matched insurer, valuing BrightRock at about R1.3bn.

Sanlam has clinched the first major deal on home soil in a while, agreeing to acquire a majority stake in smaller insurer BrightRock for up to R707m.

Sanlam’s life insurance subsidiary will purchase 53% of the needs-matched insurer, valuing BrightRock at about R1.3bn. BrightRock offers products structured to adapt as each client’s needs change throughout life.

Hennie de Villiers, deputy CEO of Sanlam Personal Finance — the insurer’s South African retail cluster — said the deal was testimony to Sanlam’s commitment to invest in SA.

“Sanlam’s acquisition of a majority share in the company is in line with our strategy to seek profitable and sustainable growth opportunities,” he said.

The deal is still subject to regulatory approvals.

Sanlam concluded its last domestic deal of this size in December 2015, when it bought a 28.7% interest in healthcare administrator Afrocentric Healthcare Assets for R703m.

The purchase price for just more than half of BrightRock, which brings in R611m in annual premium income, has not raised eyebrows. “As the maximum purchase price of R707m only represents 0.5% of Sanlam’s market capitalisation, it won’t initially impact Sanlam’s results very meaningfully,” said Adrian Cloete, an analyst at PSG Wealth. “The transaction is also a profitable and sustainable growth opportunity that should give a much superior return than the investment return that the R707m is currently earning.”