Africa’s largest insurer, Sanlam, has suffered a blow to its ambitious pan-African expansion drive after failing to meet the conditions set out in to shore up its majority stake in Moroccan insurer Saham Assurance Maroc.
In a brief statement, the company said the nearly R2bn transaction to increase its shareholding to 84.5% had “lapsed”. It currently has a 61.7% stake in the property and casualty insurer. It was subject to conditions and approvals from regulators in both countries.
Sanlam has been looking to tap into new growth markets with low insurance penetration in the rest of Africa and India and anticipated that a bigger stake in Saham would bring growth potential and strategic benefits, including deepening its direct presence in North and West Africa in line with its diversification strategy. The Cape Town-based company said in December it was in talks with Europe’s largest insurer, Allianz, about options for their respective African business units, excluding SA.
In its Moroccan expansion bid, Sanlam wanted to increase its controlling stake in Saham Assurance Maroc by 22.8%, forking out 1.241-billion Moroccan dirham. The deal was to be funded by tapping Sanlam’s debt facilities.
As part of the transaction, Sanlam’s Moroccan partner, Saham Holdings, as the seller of the additional shareholding, would have had to reinvest 50% of the consideration to acquire shares in Sanlam on the open market at the prevailing share price and hold those for at least two years.
Saham would also have continued to provide the Sanlam Group with strategic advice on matters related to its activities in Morocco. Sanlam Emerging Markets, which includes its rest-of-Africa operations, contributed about a quarter of the group’s R4.7bn net operational earnings in its half-year to end-June.
The group was established in 1918 as a life insurance company but has since become a diversified financial service provider.
Sanlam’s share price closed slightly higher on Tuesday at R60.71 after rising 1.72% over the last seven days.
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