Sanlam buys big in East Africa
Sanlam will gain about $2bn in assets with the acquisition of a majority stake in PineBridge Investments East Africa, bolstering plans to be a sizeable asset manager in the region.
Sanlam will gain about $2bn in assets with the acquisition of a majority stake in PineBridge Investments East Africa, bolstering plans to become a sizeable asset manager in the region.
Sanlam Emerging Markets (SEM) would acquire PineBridge Investments’ majority stake in PineBridge Investments East Africa, which had operations in Kenya and Uganda, Sanlam said on Wednesday. This was subject to regulatory approval.
PineBridge Investments is a New York-headquartered global asset manager with $82.7bn in assets under management. It services investors in SA, keen to invest offshore, from its Cape Town office.
On December 31 2016, PineBridge Investments East Africa had $2bn in funds under management. The business, which will house SEM’s asset management businesses in the region, will be rebranded Sanlam Investments East Africa, Sanlam said. Sanlam has insurance businesses in Kenya, Uganda, Rwanda and Tanzania, with an asset management business in Kenya.
The plan was to build a leading position in institutional, affluent and retail investment management across East Africa, said SEM CEO Junior Ngulube.
“As the business develops, it will provide opportunities to expand geographically and develop other investment products,” he said.
The size of the deal was not disclosed, but it was likely to be small, given that no announcement was made via the stock exchange news service.
“It looks like a bolt-on deal to bulk up the asset management capability in East Africa,” said Justin Floor, portfolio manager at Kagiso Asset Management.
Sanlam’s partnership approach to expansion outside SA was sensible and less risky, as local partners had a better understanding of the market and could help fund future expansion, said Adrian Cloete, portfolio manager at PSG Wealth.
East Africa was an important economic hub on the continent and currently relatively attractive, given that it benefited from a lower oil price, Cloete said.
“Sanlam is also right to follow the acquisitive route as it takes a very long time to build up businesses in new territories to a decent size if only an organic growth strategy is followed,” he said.
Sanlam has operations — directly and through its stake in the Saham Finances Group — in 32 African countries outside SA.
For the year to December 2016, SEM, which includes businesses in India and Malaysia, grew earnings 30% to R1.6bn. Sanlam derives 40% of its earnings outside SA.