JOHANNESBURG – Insurance group, Sanlam says it will acquire a 30% stake in Morocco-based Saham Finances for $375 million in order to gain access via a single entry point to untapped insurance growth markets in North and West Africa.
In terms of the agreement, Sanlam’s wholly owned subsidiary, Sanlam Emerging Markets (SEM) and its short-term arm, Santam will jointly acquire a 30% interest in Saham Finances – the insurance arm of the Saham Group.
The current majority owner, Mr Moulay Hafid Elalamy formed the Saham Group in 1995. It holds 62.5% of Saham Finances.
Sanlam is acquiring its stake from private equity players, the Abraaj Group, the International Finance Corporation (IFC) and an IFC fund.
“We became aware of them [Saham] a bit more than two years ago when they acquired a business in Angola that we were looking at,” Heinie Werth, CEO of SEM, told Moneyweb.
Saham visited Sanlam in February 2014, but at the time Abraaj and the IFC were not willing to sell their stakes, said Werth. With the support of Saham, which was keen on a longer term, strategic partner, Abraaj and the IFC eventually relinquished.
The acquisition enlarges SEM’s rest of Africa footprint from 14 countries to 30, with overlap in only four countries. Werth said Sanlam and Saham will continue to operate separately in these countries, and overlaps will be addressed. “We don’t want to compete with them,” he said, noting that the transaction is largely complementary to SEM’s existing geographical footprint.
Writing mainly non-life insurance business, Saham Finances has operations in 26 countries across North, West and East Africa, and the Middle East. It is the largest insurance group in Africa outside of South Africa, according to Sanlam, with a consolidated turnover north of $1 billion.
“The intent here is that the Saham Group will run the businesses and we will cooperate in certain areas where we see opportunities,” said Sanlam CEO, Ian Kirk. “In simple terms, we will look to assist them on general insurance and on life insurance and they will help us on the roadside assistance and medical scheme side,” Kirk said.
Sanlam and Santam will have representation on the board of Saham Finances.
Not in any major hurry to conclude further acquisitions, Werth said SEM would ensure it delivers on the acquisitions it already has. There are, however, some countries where it does not have all the businesses it would like and others that still look attractive, such as Mozambique, Ethiopia, Egypt and the DRC, Werth said.
Sanlam tends to follow the international brokers, which attract insurance flows into countries, explained Kirk. “To a large extent we’ve covered where the flows are now. Egypt and Ethiopia will attract flow and international brokers are active there,” he said.
Sanlam expects to conclude the transaction, still subject to regulatory approval, during the first quarter of 2016.