Financial services group Sanlam has jumped the final competition hurdle in its R6.5bn acquisition of Assupol, as the group sharpens its strategy to build a fortress position in SA while looking to expand on the rest of the continent and in India.
The Competition Tribunal on Tuesday said it had approved the merger with conditions, which it has not revealed at this stage. The green light comes two weeks after the Competition Commission recommended the deal go ahead subject to a moratorium on retrenchments for three years as a condition.
The conclusion of the deal will see Assupol become a member of Sanlam’s retail mass cluster. Assupol, which had gross insurance premium revenue of more than R5bn in June 2023, will continue trading under its name.
Assupol came into play last year when majority shareholder Budvest, which holds 46% of the company’s securities, and the World Bank’s International Finance Corporation, which has 19.41%, indicated their intention to sell their stakes. Both entities have been shareholders in Assupol for a decade.
Assupol traces its roots to 1913 as a burial society for members of the then SA Police. The business has since morphed into a fully fledged life insurer.
Sanlam CEO Paul Hanratty has previously said there were many synergies between the group’s retail mass cluster and Assupol’s business. The acquisition would allow Sanlam to strengthen its fortress SA strategy and signified Sanlam’s commitment to further long-term investment in SA.
It is believed the deal places Sanlam in a strong competitive position in the retail mass segment of the SA market.
Investec, the niche private banking and wealth management group, will get R1.7bn cash injection from the Sanlam and Assupol tie-up.
Investec owns an indirect stake in Assupol through its shareholding in Bud Group, formerly Investec Equity Partners.
The Johannesburg- and London-based financial services major in its 2024 annual report said there was good progress in the realisation of its noncore SA investment portfolio. It said the proposed disposal of Assupol, a significant asset within the Bud Group, was part of the assets earmarked to facilitate Investec’s exit from Bud Group.
Investec held a 36.4% stake in the Bud Group on March 31.
Sanlam, the country’s largest non-banking financial institution, has been engaged in a lot of deal-making activity over the past three years. Its three-pronged strategy is to grow its dominance in its home market, expand in the rest of the continent and build a scalable non-banking financial institution in India.
To this end, Sanlam in 2023 acquired a 60% stake in health insurer AfroCentric, added Capital Legacy to provide wills and estate services to local clients, and completed the buyout of the remaining shareholders in insurer BrightRock.
Sanlam and MultiChoice in June entered into a deal that saw the insurance major acquire 60% of MultiChoice’s insurance business, NMS Insurance Services (NMSIS), as well as a long-term commercial arrangement to expand insurance and related financial service offerings into MultiChoice’s subscriber base of 21-million households across 50 countries in Africa.
Part of the deal saw Sanlam pay an upfront cash consideration of R1.2bn to MultiChoice for its 60% stake and a potential performance-based cash earn-out of up to a maximum consideration of R1.5bn that is contingent on the amount of gross written premium generated by NMSIS for the financial year ending December 31 2026.
There was also the tie-up of its local investment management business with Absa to create an asset manager with R1-trillion in assets.
The group last year also announced a joint venture — SanlamAllianz — with Europe’s largest insurer, Allianz, which pooled most of their businesses on the continent to create a financial services partnership worth about R35bn.
Sanlam, worth about R182bn on the JSE in June, extended Hanratty’s term until the end of December 2027, having presided over a huge expansion of the group since taking over from Ian Kirk four years ago. Hanratty joined Sanlam’s board in 2017 and became CEO in July 2020. The group’s stock is up 34.6% in the past three years.
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