8 March 2018
SEMIL is the wholly-owned subsidiary of SAN JV Proprietary Limited (“SAN JV”), a special purpose vehicle currently held jointly by Sanlam’s wholly-owned subsidiary Sanlam Emerging Markets Proprietary Limited (“SEM”) (85%) and Santam (15%). Santam is supportive of the Transaction, which will enable it to play a more meaningful role in the specialist and reinsurance businesses of SAHAM Finances. Santam will confirm the extent of its participation before the Transaction becomes effective. The total consideration payable in terms of the Transaction is US$1050 million (the “Consideration”).
SEMIL first acquired a 30% stake in SAHAM Finances in February 2016 and subsequently acquired a further 16.63% stake in May 2017, bringing the total held by SEMIL in SAHAM Finances prior to the implementation of the Transaction to 46.63%.
At the time of implementation of the Transaction, SAHAM’s sole asset will be the SAHAM Finances Interest.
SAHAM Finances is an insurance group with operations in 26 countries across North, West and East Africa, and the Middle East. It predominantly writes personal lines general insurance business (which exceeds 80% of its portfolio). SAHAM Finances has approximately 65 subsidiaries, a network of 700 branches and a staff complement of more than 3,000 people. SAHAM Finances has a leading market share in many of the markets in which it operates.
SAHAM Finances owns
inter alia 58.48% of SAHAM Assurance Morocco, which is listed on the Moroccan Stock Exchange. The Transaction will give rise to an obligation on SEMIL (as the controlling shareholder of SAHAM Finances) to launch a mandatory offer to minority shareholders in SAHAM Assurance Morocco. SEMIL does not anticipate being required to incur any additional capital outlay in relation to such an offer.
Sanlam sees a number of strategic benefits in increasing its interest in SAHAM Finances to 100%, which includes the following:
The acquisition of 100% of SAHAM Finances enables Sanlam to have a meaningful presence across sub-Saharan and North Africa, and is a natural extension of Sanlam’s stated strategy. SAHAM Finances’ overall performance has been in line with the original business case which was put forward when the initial acquisition of a 30% interest in SAHAM Finances was considered, and the SAHAM Finances’ management teams are working well with the Sanlam and Santam support teams. The Transaction increases Sanlam’s exposure to high-growth markets as well as general insurance products.
The Consideration payable for the acquisition of the SAHAM Finances interest will be US$1050 million, plus transaction costs.
The Sanlam Group will fund the Consideration by using a combination of available discretionary capital, debt facilities and the issuance of equity instruments within current approved shareholder limits and taking cognisance of its existing credit ratings and solvency ratios.
The implementation of the Transaction will remain subject to the fulfilment or waiver, as the case may be, of a number of conditions precedent including,
inter alia, the receipt of all necessary regulatory approvals and the implementation by SAHAM of a corporate restructure in order to divest itself of all its investment holdings, assets and liabilities other than the SAHAM Finances interest.
Based on the reviewed financial statements for the year ended 31 December 2017, the consolidated net asset value of SAHAM Finances on 31 December 2017 was US$ 850million and the earnings for the period were US$ 77.4million. Sanlam is satisfied with the quality of these reviewed financial statements.
Post the implementation of the Transaction, SEMIL will participate in 100% of the earnings and net asset value of SAHAM Finances. Sanlam will consolidate its proportionate ownership in SAHAM Finances in its consolidated financial statements and will be earnings enhancing.
The effective date of the Transaction will be dependent on the fulfilment or waiver, as the case may be, of the conditions precedent and is expected to occur during the second half of 2018.
For purposes of the Listings Requirements of the JSE Limited, the Transaction has been categorised as a Category 2 transaction in terms of the Listings Requirements of the JSE Limited for Sanlam.
Post the implementation of the Transaction, SAHAM and SAHAM Finances will become subsidiaries of Sanlam. Sanlam will ensure that the memorandum of incorporation of SAHAM and SAHAM Finances are amended to comply with the provisions of 10.21 of Schedule 10 of the JSE Listings Requirements.