Political tension between South Africa and Morocco – allegedly related to Pretoria’s stance on the disputed territory of Western Sahara and its recent decision not to support Morocco’s 2026 soccer World Cup bid – is said to be delaying regulatory approval for Sanlam’s buyout of pan-African insurer Saham Finances.
Nevertheless, Sanlam is confident that the Moroccan insurance regulator will soon sign off on the multi-billion-rand deal.
Sanlam intends to buy out the remaining 53.37% shareholding in Saham for $1.05 billion after partnering with subsidiary Santam to acquire just over 46% of the business between 2016 and 2017.
At the time, the transaction was dependent on regulatory approval across the 26 jurisdictions in which Saham operates.
During a financial results presentation in Johannesburg last week, Sanlam Emerging Markets chief executive Junior Ngulube said the deal had already been greenlighted by the majority of regulators and that only “a handful” of approvals were still outstanding and expected by year-end.
Moneyweb has learnt that the regulator in Morocco – the country in which Saham is headquartered and listed – has yet to approve of the transaction.
Sanlam chief executive Ian Kirk, when asked about the reasons for the delay, told Moneyweb that the company is close to gaining approval in Morocco: “There were some diplomatic issues between the two countries that were well publicised [and] I think that has probably been one of the reasons for the delay. We are confident that that will get sorted out. It is important for both Morocco and South Africa to have close diplomatic ties. There was some progress last year [and] it got set back a little bit this year. We remain confident that while there may be a delay we will get there eventually. The deal makes sense for all parties.”
Moroccan publication Le Boursier reports that the country’s insurance regulator missed a 30-day deadline – from the date on which papers were filed by Sanlam and Saham – to approve of the deal. The transaction was announced in March this year.
The publication quoted an unnamed spokesperson who said the review of the transaction was on schedule.
Moneyweb’s questions to the Moroccan insurance regulator sent in June remain unanswered.
Le Boursier speculated that the delay flowed from political tension between South Africa and Morocco and mentioned the South African government’s recent decision not to support Morocco’s bid for the 2026 World Cup as a potential factor. Sanlam is of course a South African company.
Prior to this, diplomatic relations between South Africa and Morocco were strained when Pretoria recognised the Sahrawi Arab Democratic Republic (SADR) as an independent state in 2004. The SADR is a self-declared state in the Western Sahara, which is occupied by Morocco.
South Africa and several other African Union members view Morocco’s occupation of the SADR as illegal and maintain that the Sahrawi people ought to be allowed to exercise their right to self-determination, said a media statement issued by the Presidency announcing the June visit of the SADR president. Prior to that visit, Pretoria signed a memorandum of understanding with the SADR in March, in which it pledged political and humanitarian assistance to people displaced by the conflict in the Western Sahara.
The Mail & Guardian reported that South Africa and Morocco were to re-establish diplomatic relations late last-year after heads of state met on the sidelines of an African Union-European Union Summit last November.
Ndivhuwo Mabaya, a spokesperson for the Department of International Relations and Cooperation (Dirco), told Moneyweb that South Africa has “very good” diplomatic relations with both Morocco and the SADR, adding that it was not aware of the deal. “We are not aware of the deal, but the [Diplomatic] Mission in Morocco and SADR will be aware and giving necessary support if required by the companies.”
While Dirco does not facilitate private deals, he added, it supports South Africans and South African companies in engaging with relevant local government institutions and serves to assist in understanding the environment and all other relevant information.
Sanlam’s acquisition of Saham is in line with its strategy to become the leading insurer on the African continent, with Saham set to give it an ownership footprint in 19 additional countries, broadening its presence to 33 countries.
Sanlam announced last week that it would fund the R13 billion transaction – including a contribution of R864 million from Santam and hedged at R13.24 against the dollar – through its first equity raising since demutualisation in 1998. The equity raising is set to increase Sanlam’s direct black shareholding to 19%, which bodes well for its institutional business in South Africa.