- Absa and Sanlam said they have agreed to combine their investment management businesses and create an asset management company
- It will be called Sanlam Investment Holdings Proprietary Limited (SIH), and is expected to have assets under management, administration and advice in excess of R1 trillion.
- SIH will be bigger than Coronation, Stanlib and the Old Mutual Investment Group (OMIG).
Sanlam and Absa have joined forces to create one of the largest asset management businesses in the country.
The two financial giants said they have agreed to combine their investment management businesses and create a company with assets under management, administration and advice in excess of R1 trillion.
The companies said Absa will exchange its investment management business, Absa Investments, for a stake of up to 17.5% in the asset management company that Sanlam created with Patrice Motsepe's African Rainbow Capital (ARC) called Sanlam Investment Holdings Proprietary Limited (SIH).
SIH is a third-party asset management business in which ARC Financial Services holds a 25% stake. Sanlam owns the remaining 75%.
The transaction has been rumoured for a while, but the companies kept tight-lipped about it for months.
- READ | Absa in talks with Sanlam and Patrice Motsepe's ARC investments about selling its asset-management unit
Absa Investments comprises Absa Asset Management, Absa Alternative Asset Management, Absa Fund Managers (excluding the Absa Prudential Money Market Fund) and Absa Multi Management.
As part of the transaction, Sanlam-owned Satrix, which is now a subsidiary of SIH, will acquire the exchange traded funds (ETF) business of Absa’s NewFunds (excluding its commodity ETF business).
The intention is that Absa will enter into agreements to dispose of its market Linked Investment Services Provider (LISP) business to Glacier by Sanlam.
Absa will also enter into a 10-year distribution agreement with SIH, meaning that the two companies will use sales channels of both Sanlam and Absa.
"The combination of SIH with Absa Investments will further strengthen SIH’s position as one of South Africa’s largest black-owned asset managers," wrote the two companies in a statement.
With assets under management, administration and advice exceeding R1 trillion, SIH will be bigger than Coronation, Stanlib and the Old Mutual Investment Group (OMIG).
The OMIG website shows that the firm has over R650 billion in assets under management. Coronation shows that its assets under management stood at R630 billion on 30 June 2021 and Sanlib grew thairs to R652 billion over that period.
Ninety One is bigger with assets under management of £130.9 billion (about R2.6 trillion) at the end of March 2021.
"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," said Sanlam Group CEO Paul Hanratty.
Absa interim group CEO Jason Quinn said that the transaction will help the bank create a deeper, broader range of investment solutions for its clients.
"There is an exciting complementary nature to the relationship, which we believe will realise value for all of our stakeholders. For our staff, there will be an opportunity to work for a larger world-class, multi-capability investment business," said Quinn.
The Absa transaction follows another alliance that Sanlam recently enter into with MTN to build Africa-wide digital insurance business.