San­lam aims to grow its port­fo­lio

Busi­ness growth im­per­a­tive

The Star Early Edition - - COMPANIES - Sandile Mchunu

A SOUTH African econ­omy that is grow­ing by less than 1 per­cent per an­num is not go­ing to de­ter San­lam Per­sonal Fi­nance to look for op­por­tu­ni­ties and snap up promis­ing ac­qui­si­tions to grow its busi­ness.

The re­cent ac­qui­si­tion of a 53 per­cent ma­jor­ity stake in BrightRock for R707 mil­lion by San­lam’s sub­sidiary is the tes­ti­mony of how se­ri­ous the com­pany is in grow­ing its port­fo­lio un­der the de­pressed econ­omy.

San­lam Per­sonal Fi­nance deputy chief ex­ec­u­tive Hen­nie de Vil­liers was not at lib­erty to share much of in­for­ma­tion as the com­pany is in a closed pe­riod. How­ever, he said a bet­ter per­form­ing econ­omy would be good for busi­ness.

“As much as we would like to see the econ­omy per­form­ing bet­ter than this, some as­pects of our busi­ness are still hold­ing their own and are solid, es­pe­cially in the life and dis­abil­ity busi­nesses. The dis­cre­tionary sav­ings is still un­der pres­sure, though.”

Dis­cre­tionary sav­ings is the amount of an in­di­vid­ual’s in­come that is left for spend­ing, in­vest­ing or sav­ing af­ter pay­ing taxes and pay­ing for per­sonal ne­ces­si­ties, such as food, shel­ter and cloth­ing.

Dis­cre­tionary sav­ings in­cludes money spent on lux­ury items, va­ca­tions, and non-es­sen­tial goods and ser­vices.

“The volatile mar­ket makes peo­ple and busi­nesses ner­vous. Some­times they pre­fer to sit on the side­lines and don’t use the money that could have been in­vested. But the other truth – lack of em­ploy­ment and the cost of liv­ing – has left lit­tle in the in­di­vid­u­als’ cof­fers to in­vest,” said De Vil­liers.

In Oc­to­ber the In­ter­na­tional Mon­e­tary Fund put the coun­try’s eco­nomic growth at 0.8 per­cent in 2017, lower than the 1 per­cent it pro­jected last July.

“This year’s prospects are not look­ing great as well. We have had a bet­ter start to the year than 2016, and we are cau­tiously op­ti­mistic for the year ahead,” said De Vil­liers.

In De­cem­ber S&P Global Rat­ings de­cided not to down­grade South Africa.

“The rat­ings agen­cies as­sign dif­fer­ent rat­ings to a coun­try and the com­pa­nies that be­long to that coun­try. We are rated as com­pany sep­a­rately, but it does help if a com­pany gets a favourable grade from the rat­ing agen­cies.

It makes do­ing busi­ness a lot eas­ier if the coun­try avoids a junk sta­tus. How­ever, it doesn’t mean if San­lam would be down­graded to junk sta­tus if the coun­try gets a down­graded at a later stage,” he said.

Turn­ing his at­ten­tion on the BrightRock ac­qui­si­tion, De Vil­liers said the ac­qui­si­tion was in line with San­lam’s strat­egy to seek prof­itable and sus­tain­able growth op­por­tu­ni­ties and is tes­ti­mony to San­lam’s com­mit­ment to in­vest in South Africa. “BrightRock has been our com­peti­tor for a while. By ac­quir­ing the com­pany means we have busi­nesses that com­ple­ment each other,” he said.

San­lam and BrightRock will con­tinue to func­tion as in­de­pen­dent busi­nesses, re­tain­ing their own brands, life in­sur­ance li­cences and man­age­ment teams.

The ac­qui­si­tion is sub­ject to reg­u­la­tory ap­proval.

R707m The price San­lam paid for a 53% stake in BrightRock

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