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Sanlam buys Absa’s investment management businesses in SA

Absa to own 17.5% of Sanlam Investments.
Image: REUTERS/Mike Hutchings

Sanlam and Absa announced on Tuesday that Sanlam would acquire Absa’s investment management business, increasing Sanlam Investment Holdings’s (SIH) total assets under management to more than R1 trillion.

The transaction will result in Absa holding 17.5% in Sanlam Investments.

According to a statement, Absa Investments includes Absa Asset Management, Absa Alternative Asset Management, Absa Fund Managers and Absa Multi Management.

Absa’s Prudential Money Market Fund is excluded from the transaction.

Empowerment group ARC Financial Services Investments has a 25% interest in Sanlam Investments, with Sanlam owning the remaining 75%. The combination of SIH with Absa Investments will further strengthen SIH’s position as one of South Africa’s largest black-owned asset managers.

According to the statement, Sanlam Investments’ exchange-traded fund (ETF) business Satrix will acquire Absa’s ETF business, although the commodity ETF business will be excluded.

Absa also intends to sell its market linked investment services provider (Lisp) business to Glacier.

Absa will also enter into a 10-year distribution agreement with SIH, meaning the expanded operations will utilise the distribution networks of both Sanlam and Absa, which significantly broadens the market reach for the enlarged SIH.

Sanlam Group CEO Paul Hanratty said, “Sanlam prides itself on having a leading investment business at our core to ensure that we can deliver superb returns to all our customers. We are confident that this transaction will strengthen our ability to deliver investment excellence for customers through our ability to further invest in the business.”

Jason Quinn, Absa Interim group chief executive, said, “the transaction delivers improved scale, capabilities, customer propositions and transformation, all of which we view as essential to achieving growth in the investment management sector. The transaction will help us create a deeper, broader range of investment solutions for our clients.”

“There is an exciting complementary nature to the relationship, which we believe will realise value for all of our stakeholders.”

The effective date of the transaction is expected to occur in the first half of 2022.

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When a bad business gets bought by a bad business

You get a big bad business!

Take a moment to sympathize for those ABSA “Wealth Managers” who now become Sanlam product pushers.

“Absa will also enter into a 10-year distribution agreement with SIH, meaning the expanded operations will utilise the distribution networks of both Sanlam and Absa, which significantly broadens the market reach for the enlarged SIH”

I suspect that the corporate boot is about to be applied. A number of retrenchments must be inevitable and I suspect substantial consolidation in the local asset management industry. Too many negative alpha creators out there being paid to lose against the indices.

When you read about one Asset Manager slurping up another in SA, in just tells me the asset pool is getting smaller over time.

Same story with the 601 JSE-listed companies in 2001. Today the JSE has 344.

Quo vadis SA?

Here they go again. They sell you garbage investments and then you borrow from them on the other side. It has been going on for the entire 25 years I have been here. Ever wonder why 95% of working people don’t have enough savings at retirement??????? And I QUOTE “Sanlam policy 10139916X0 after 16 years of contractual savings the money you get out is worth -36.4% LESS than the money you invested!” I know a lady that has a 30 year home bond and a broker sold her a retirement annuity??????????????? IT’S ALL ABOUT THE BENJAMIN’S!!

End of comments.

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