Sanlam’s strategic repositioning at a heavy price

SANLAM sliced more than R6.3 billion off its market cap after the insurer announced a strategic repositioning and plans to establish a leading black-owned asset management company.

Sanlam, which completed a strategic review yesterday, said it also wanted to form a black-owned asset management company with its empowerment partner.

The strategy review included a focus on clients and on digital transformation to improve the client and intermediary experience.

The group said that it would split the Sanlam Personal Finance business cluster into two from September to support this.

It said SA Retail Mass would consist of Sanlam Sky, Safrican and African Rainbow Life, and SA Retail Affluent.

The two clusters, together with Sanlam Corporate, will form part of a new Life and Savings cluster.

Among the new appointments was Jurie Strydom, current chief executive of Sanlam Personal Finance, appointed chief executive of the newly established Life and Savings cluster.

Kanyisa Mkhize was appointed chief executive of Sanlam Corporate, while Bongani Madikiza, currently head of African Rainbow Life, was appointed chief executive of SA Retail Mass.

Sanlam also announced that it was planning to sell a 25 percent stake in its new black-owned asset management company to Patrice Motsepe’s African Rainbow Capital.

The group said the expected maximum purchase price would be R815.2 million.

It said a new investment holding company, NewCo, would boost its empowerment credentials and give it better access to institutional flows.

“This is particularly relevant in the challenging operating environment, which is likely to persist in the near term as the country recovers from the severe impact of the Covid-19 pandemic,” the group said.

African Rainbow Capital Financial Services Holdings’ (ARCFC) purchase of shares in Newco will give it a 25 percent economic interest in Sanlam Investment Holdings (SIH), with Sanlam owning the rest of SIH. SIH senior management might take up to a further 5 percent of SIH shares in future.

The transaction put the black economic interest in SIH at more than 51 percent in terms of the Amended Financial Sector Code.

African Rainbow Capital Proprietary is a subsidiary of Ubuntu-Botho Investments, which is a material shareholder in Sanlam.

The new asset management company will do third party asset management outside the investment management business of Sanlam Private Wealth and the Sanlam Specialised Finance division.

ARCFC’s objective was to establish a black-controlled diversified financial services group with exposure to key sub-sectors in the financial services sector.

Sanlam shares closed 6.27 percent lower at R56.55 on the JSE yesterday.