Sanlam has finalised the acquisition of Alexforbes’s individual client administration business in a move that puts it on track to usurp the Allan Gray investment platform’s status as the largest fund supermarket in SA.
The deal will see Glacier by Sanlam, a so-called Linked Investment Service Provider (LISP) that is a subsidiary of Sanlam, take full control of Alexforbes Individual Client Administration and its two wholly owned subsidiaries, Alexforbes Retail Client Administration and Alexforbes Nominees, from March 1.
A LISP allows investors to access a range of unit trusts from different companies on a single platform, a model commonly known in the UK as a “fund supermarket”. The acquisition of Alexforbes’s individual client administration business will add about R76bn in assets to the roughly R318bn already administered on the Glacier platform, giving the combined entity an asset base of R394bn.
“When we do these transactions, we’ll probably be the biggest fund supermarket in SA,” Glacier by Sanlam CEO Khanyi Nzukuma said in an interview. “Combining these two businesses gives you scale in every way.”
Data submitted to the Association for Savings and Investment SA (Asisa) shows that the Allan Gray LISP business had assets of R388bn as at end-December 2022. Glacier's total assets at the same date were at R318bn while Ninety One’s LISP had R263bn in assets.
Though Glacier by Sanlam’s buyout of Alexforbes’s individual client administration business may see it surpass Allan Gray’s market-leading LISP position, its asset base is expected to grow even further after the integration of Absa’s LISP business.
Absa agreed to sell its LISP business to Glacier by Sanlam in October 2021 as part of the broader merger of Sanlam and Absa’s investment-management businesses. The integration of Absa’s LISP into Glacier is expected to be finalised towards the end of 2023.
Though Absa has stopped disclosing LISP data to Asisa, the most recently available number for the business was R66bn as at end-June 2021.
Earl van Zyl, head of product development at Allan Gray, says he estimates the LISP industry in SA could be underestimated by as much as 30% as some companies do not disclose their assets for these platforms. For example, Old Mutual, which is one of the largest LISPs in SA, does not report its data to Asisa.
As such, he estimates that the LISP industry in SA is anywhere between R1.7-trillion and R2.1-trillion in size.
Sanlam says the deal with Alexforbes will enhance its competitiveness in the LISP market while providing Alexforbes’s individual clients with improved administration and user functionality thanks to Glacier’s technological capabilities. The transaction will also result in a comprehensive set of Alexforbes’ individual client products, spanning both retirement and savings, now being administered on the Glacier by Sanlam platform.
Nzukuma said the deal also allows Glacier to “buy market share” at a time when moribund economic growth is making it more difficult for businesses to expand organically.
“We’ve realised that organic growth is going to be flat for quite some time,” said Nzukuma. “There’s a lot of consolidation inside the market ... it’s shrinking a little bit.”
Alexforbes said in response to the deal that it would modernise the digital experience delivered to its financial advisers and clients while Glacier’s “best-in-class technological capability” will allow for improved administration and user functionality.
The administration of employer umbrella funds, in-fund solutions for Alexforbes Retirement Fund and Alexforbes Access will remain with Alexforbes.
theunisseng@businesslive.co.za
Updated: March 01 2023
This article has been updated with additional information
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