Sanlam aims to grow its portfolio

Business growth imperative

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