Sanlam's attempt to increase stake in Moroccan insurer fails

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Sanlam hoped to finalise the acquisition by the end of the third quarter of 2021. (iStock)
Sanlam hoped to finalise the acquisition by the end of the third quarter of 2021. (iStock)

Sanlam's attempt to increase its stake in a Moroccan general insurer has not materialised due to all conditions not having been met, it said in an announcement on Monday.

In May 2021 Sanlam announced a proposed acquisition by SAN JV - a special purpose vehicle held jointly by Sanlam's wholly-owned subsidiary, Sanlam Emerging Markets (SEM) and Santam - of an additional 22.8% shareholding in Saham Assurance Maroc for about R2 billion.

It was to be funded using debt facilities and Sanlam hoped to finalise the acquisition by the end of the third quarter of 2021.

Conditions included approvals from the relevant regulatory authorities in both South Africa and Morocco. As part of the transaction, Sanlam's Moroccan partner Saham Holdings, as the seller of the additional shareholding, would have had to reinvest 50% of the consideration to acquire shares in Sanlam on the open market at the prevailing share price and hold these for a minimum of two years.

Saham would also have continued to provide the Sanlam Group with strategic advice on matters related to its activities in Morocco. Sanlam anticipated a bigger stake in Saham would bring growth potential and strategic benefits, including deepening its direct presence in north and Francophone west Africa, and bringing Sanam into the Sanlam Group, in line with its African diversity strategy. 

Since the proposed deal has lapsed, San JV's shareholding in Saham remains at 61.7%, which it owns through SEM.

Sanlam spent $1.1 billion in 2018 to acquire Saham Finances, which propelled the company to become Africa's largest insurer, with a presence in 44 countries.

But it almost looked like Sanlam ended with an egg in its face when critics and some shareholders started questing what they regarded as value destruction caused by the Morrocan deal when the Covid-19 pandemic struck.

The R5.8 billion impairment resulted from Sanlam writing off most of the premium it paid for synergies it had expected to realise from the acquisition.

With Londiwe Buthelezi

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