Africa’s largest insurer Sanlam, which has offered to buy a controlling stake in AfroCentric, said on Tuesday it had received preliminary approval from the latter’s shareholders.
Shareholders representing 46.4% of AfroCentric’s issued shares have backed the proposed deal, exceeding the required minimum share percentage of 36.9%. However, there are still other outstanding conditions to be fulfilled for the partial offer to be deemed wholly unconditional.
If the proposed transaction proceeds, Sanlam will hold a majority of 55%-60% of AfroCentric’s shares, with the final shareholding dependent on the percentage of AfroCentric shareholders who accept its offer.
Sanlam has said its motivation for the offer is that customers need reliable and affordable health care, and that it intends expanding its product offering to include medical aid, health insurance and administration.
AfroCentric, which owns SA’s second-biggest medical scheme administrator Medscheme, has long been vocal about stagnant medical scheme membership and that far more urgency is needed to change laws to allow for lower-cost alternatives.
The medical scheme industry has for years wanted to introduce lower-cost options for employed individuals who are not insured, but has been prevented from doing so by regulations that stipulate a base level of cover that costs at least R1,000 a month.
Medscheme manages healthcare services for members of the Government Employees Medical Scheme, SA’s largest closed scheme, meaning it is not open to the public.
With Garth Theunissen
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