Sanlam, Allianz in R33bn African financial services venture deal
Sanlam shareholders likely to benefit from ‘accelerated trust building’
SANLAM and global financial services group Allianz SE have reached agreement to create a R33 billion “leading pan-African financial services” joint venture, the groups announced yesterday.
Following months of negotiations – Sanlam issued a first cautionary note about the talks in December 2021 – the groups said yesterday that they would create a financial services group with an extensive footprint initially across 29 African countries.
Andrew Bahlmann, the chief executive of Deal Leaders International, said the deal had the potential to be a good one for Sanlam shareholders, and while benefits may not materialise overnight, in the long term it could be a big profit generator for Sanlam.
“In Africa, everything is about trust. This deal promises Sanlam accelerated ‘trust-building’ through Allianz’s greater scale and local expertise, enabling the JV to lock down new clients experiencing a broad range of risks such as supply chain issues or facilitating the energy transition, in a balanced and responsible manner,” he said.
A JSE analyst, who preferred not be named, said it was a good deal for Sanlam shareholders as there was no capital deployment by the group, and the announcement had alleviated some concerns that it might have resulted in a buyout of Sanlam interests.
The transaction might also result in a R1bn special dividend for shareholders of Sanlam’s listed short-term insurance subsidiary Santam, the analyst said.
Gryphon Asset Management portfolio manager Casparus Treurnicht said Sanlam had invested heavily in these markets operations over 10 years, and this deal represented a change of strategy. He said the only benefit he could see was for the parties to gain market share and scale in these markets.
“In line with Sanlam’s ambition to be a leading pan-African financial services group, the proposed joint venture will enable us to take a significant step toward realising that ambition. It will also strengthen our leadership position in multiple key markets, building quality and scale where it matters,” Sanlam Group CEO Paul Hanratty said yesterday.
Sanlam was one of the top three market leaders in 10 African countries for life and 13 for general insurance in 2021, its annual report showed. Some 15 percent of its earnings were derived from these markets in that year.
“Allianz is pleased to accelerate its growth in this region through a partnership with the market leader. Sanlam’s capabilities extend our local reach and market penetration, and the joint venture allows us to establish leading positions in key growth markets for Allianz,” Member of the Board of Management of Allianz SE Christopher Townsend said.
Sanlam, through its Sanlam Emerging Markets (SEM) subsidiary and associated entities, has life, general insurance, and investment management operations in more than 30 African countries, including Morocco, Ivory Coast, Nigeria and Botswana.
Allianz’s insurance portfolio spans 11 countries, excluding South Africa, including operations in Egypt, Kenya, Cameroon and Uganda.
Allianz, which provides insurance and asset management services in more than 70 countries globally, has more than 100 years of heritage in Africa, and a strong presence in key African countries such as Egypt, Kenya, Cameroon and Uganda, with an insurance portfolio across 11 countries, excluding South Africa.
Sanlam will hold 60 percent in the joint venture and Allianz 40 percent, with the ability for Allianz to increase its stake to 49 percent over time.
The general equity value of the joint venture was €2 billion (R33bn), and Sanlam would make assets with a net asset value of €1.3bn (R22bn) available for the joint venture.
SEM would contribute its African assets, excluding South Africa, Continental Re and its Namibian subsidiaries, but including its 90 percent stake in SAN JV, for a 60 percent shareholding in the joint venture.
Allianz would contribute all its African assets, including its minority stake in African Reinsurance Corporation and its shareholding in Jubilee’s general insurance businesses in Kenya, Uganda and Burundi. Sanlam subsidiary Santam would sell its 10 percent stake in SAN JV to Allianz Europe for R2bn.
Sanlam’s operations in Namibia would be contributed to the joint venture at a later stage, while its operations in India, the Middle East and Malaysia would not be contributed to the joint venture.