Santam has reached an agreement to buy the 76% of brokerage firm Indwe Broker Holdings it does not already own from Sanlam Life Insurance and Patrice Motsepe's African Rainbow Capital (ARC) Financial Services.
ARC Financial Services owns 51% of Indwe while Sanlam holds 25% with the remaining 24% held by Santam. ARC Financial Services is a subsidiary of African Rainbow Capital and Ubuntu-Botho Investments (UBI). The latter is a shareholder of Sanlam and is also its broad-based BEE partner. Santam is in turn a subsidiary of Sanlam, which holds about 59% of its shares.
The purchase price for the 76% shareholding amounts to R125m and will be settled in cash upon the closing of the transaction, which is subject to regulatory approval by the Competition Commission and the Prudential Authority (PA).
Santam said in a statement posted on the stock exchange news service (Sens) that by becoming the sole owner of Indwe it would simplify the investment and reporting structure, while maintaining the benefits of UBI and Sanlam’s indirect ownership in Indwe.
In support of Indwe’s strategy to provide segment-focused solutions and as part of the transaction, Indwe’s corporate and specialist business will be sold to an independently owned entity that was not named, while the personal and commercial business and Indwe BlueStar will remain part of Indwe, the statement added.
For the financial year to end-June 2021, Indwe’s net profit after tax amounted to R17m while its net asset value is estimated at R91m. BDO Corporate Finance has provided an independent opinion to Santam’s board stating that it views the transaction as fair, an opinion that is being reviewed by the JSE. Santam’s shareholders will be advised on the outcome of this review once the fairness opinion has been finalised.
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