Sanlam Life has entered into definitive transaction agreements to acquire a 25% interest in African Rainbow Capital Financial Services Holdings (ARC FSH), the financial services group said on Monday.
The proposed transaction entails Sanlam Life subscribing for ordinary shares in ARC FSH for a cash consideration of R2.4bn, and Sanlam Life disposing of its 25% interest in ARC Financial Services Investments (ARC FSI), with a value of R1.49bn, to ARC FSH in exchange for the issue by ARC FSH of ordinary shares to a similar value to Sanlam Life.
ARC FSH is the investment holding company for all the financial services investments of the Ubuntu-Botho Investments group of companies (UBI Group), other than its shareholding in Sanlam, which is held directly by UBI.
After the conclusion of the proposed deal, ARC FSH will hold 100% of the shares in ARC FSI, together with its existing investments in Tyme Bank, AI Fund, CrossFin and Ooba.
ARC FSH is currently 50.1%-owned by African Rainbow Capital and 49.9% by the ARC Fund, an en commandite partnership with UBI General Partner. ARC and UBI GP are wholly owned subsidiaries of UBI.
UBI is Sanlam's strategic empowerment partner and, in this context, ARC and Sanlam partner in certain specific strategic initiatives in the financial services sector within SA, towards delivering better customer propositions, increasing competition as well as promoting financial inclusion, Sanlam said in a statement.
In furtherance of this objective, Sanlam acquired a 25% non-controlling minority stake in ARC FSI in 2021, which has allowed Sanlam to benefit from the growth of the ARC FSI portfolio, strengthen its market presence in SA and expand on its financial inclusion imperative.
“The proposed transaction is a natural extension of Sanlam's existing interest in ARC FSI. Sanlam will continue to explore ways to collaborate strategically with ARC FSH and its portfolio investments to enhance competition and to assist Sanlam in providing holistic and integrated product offerings to its clients,” it said.
The proposed transaction is subject to conditions and the long stop date is end-October.
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