Sanlam, Africa’s largest non-banking financial services group, and Absa, one of Africa’s largest diversified financial services groups, announced that they have reached an agreement to combine their investment management businesses in a transaction which will result in an asset management company with assets under management, administration and advice in excess of 1 trillion rands.
The transaction will see Absa exchange its investment management business, Absa Investments, for a stake of up to 17.5% in Sanlam Investment Holdings Proprietary Limited (SIH). 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, Satrix, a subsidiary of SIH, will acquire the exchange-traded funds (ETF) business of Absa’s NewFunds (excluding its commodity ETF business), and the intention is that Absa will enter into agreements to dispose of its market Linked Investment Services Provider (LISP) business to Glacier by Sanlam. The conclusion of agreements to give effect to the LISP transaction is a suspensive condition to the investment management transaction.
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.
“We are delighted to welcome Absa clients and investment management business employees to Sanlam when the transaction becomes effective. 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.” Sanlam Group CEO, Paul Hanratty.
For Absa, 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,” Jason Quinn, Absa Interim Group Chief Executive.
“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.” Jason Quinn, Absa Interim Group Chief Executive.
The effective date of the transaction will depend on the fulfilment of certain suspensive conditions including regulatory approvals (such applications will be submitted to the relevant regulators in due course) and is expected to occur in the first half of 2022.