Sanlam, Santam cut deals in emerging markets

Botswana latest short term insurance firm, BIHL Sure, will soon have a new investor, Santam, which has resulted from a multi-million Pula deal that involve parent company-Sanlam and Santam, a leading short-term insurer in South Africa.

Sanlam owns BIHL Sure! through Sanlam Emerging Markets (SEM), which itself(Sanlam) has a stake on BIHL Sure! through BIHL. This week Sanlam Group announced SEM Limited and Santam Limited have entered into a series of transactions to align their interests in current and future short-term insurance investments in emerging markets.

SEM is tasked within the Sanlam Group with expansion into international emerging markets and currently operates in 10 African countries outside South Africa as well as in India and Malaysia. Santam is the leading short-term insurer in South Africa with total assets of more than R18 billion and insures 80 of the top 100 companies listed on the JSE.

As part of the transaction, Santam will pay a net amount of R167.7 million to SEM. At the effective date Santam will subscribe for shares of separate classes in SEM. The move will see Santam having an 18.6 percent participatory interest in BIHL (BIHL Sure) in Botswana. Santam will also have a 15.4 percent participatory interest in Pacific & Orient Insurance Corporation, incorporated in Malaysia. SEM acquired its stake in P&O in May 2013.

Further the company will have a 7 percent participatory interest in Shriram General Insurance Company Limited (SGIC), incorporated in India, and an 8.7 percent participatory interest in the short-term insurance subsidiaries of NICO Holdings in Malawi, Zambia, Tanzania and Uganda.

Sanlam Group’s Chief Executive, Dr Johan van Zyl revealed in a statement that the transaction is in line with Sanlam’s strategy to diversify both geographically and into broader financial services and is a logical next step in their growth strategy. “We continue to endeavor to keep the business on a strategically sound footing for the future and we believe this transaction will sustain our efforts to grow value for our shareholders and bolster our position in the market,” he said. His colleague at SEM Heinie Werth, said the combined expertise of Sanlam and Santam would enhance SEM’s offering, given their collective years of experience and combined competitive product offering.

The Transaction positions SEM as a single investor for the Sanlam Group’s short-term insurance businesses in emerging markets whilst enabling Santam to share in the economic interest of the current and future short-term insurance expansion in these markets. “SEM and Santam will respectively participate on a 65 percent and 35 percent basis in the Sanlam Group’s short-term insurance businesses in emerging markets.

BIHL CEO Gaffar Hassam told BG Business that the transaction would not affect the shareholding structure especially at the BIHL group level. “The only change is that SEM and Santam have agreed to operate together under the SEM, with Santam now having a certain share of profits from the SEM,” he said.

Through its participation in the Sanlam Group’s emerging market short-term insurance investments, Santam will obtain exposure to the Indian, Malaysian and African emerging markets, and have the opportunity to participate in the Sanlam Group’s future emerging markets short-term insurance investments.

Santam and Sanlam are separately listed on the Johannesburg Stock Exchange (JSE) although Sanlam is also a major shareholder in Santam.