The Sanlam-Allianz Grip

The two giants are creating a leading pan-African financial services group with an extensive footprint across the African continent. However, shareholders have been assured that “the transaction does not have any bearing on the operations of BIHL as the ultimate control of the Group will remain with Sanlam”. The combined operations of Sanlam and Allianz will create a premier pan-African non-banking financial services entity operating in over 29 countries across the continent. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] The joint venture will be the largest pan-African insurance player and is expected to be ranked in the top three in most markets where the entity will operate. The entity is expected to have a combined total group equity value (GEV) in excess of R35 billion (Over 2 billion euros). Combining Sanlam’s expertise in Africa with Allianz’s global capabilities and insurance solutions, particularly for multinational businesses, the partnership aims to increase life and general insurance penetration, accelerate product innovation, and drive financial inclusion in high-growth African markets. BSE’s record-breaking trade On Wednesday, Botswana Insurance Holdings Limited (BIHL) cautioned shareholders about a significant trade in the country’s most diversified insurer’s securities. About 58 percent of the group’s total shares in issue exchanged hands on Monday this week. The 164,991,531 shares, worth P2.89 billion, are now in the hands of a joint venture between Sanlam Group and Allianz SE. As part of the transaction, according to a communiqué by BIHL, Sanlam and Allianz were contributing their respective African operations, which include the behemoth BIHL on the part of Sanlam, into the newly incorporated joint venture company (SanlamAllianz). Before this transaction, Sanlam owned the 58 percent stake through Sanlam Emerging Markets and African Life Assurance which held 41.2 percent and 17.2 percent of total securities issued by BIHL respectively. Both African Life Assurance Company and Sanlam Emerging Markets are wholly owned subsidiaries of Sanlam. African Life first acquired a major shareholding in BIHL from Southern Life and Botswana Development Corporation in 1995. It was then swallowed by Sanlam Limited around 2005. As recent as 2014, Sanlam had increased its stake in BIHL by a 5 percent split between the two holders. The shares have been transferred to SanlamAllianz. BIHL communiqué shows that 116,388,211 shares, representing 41.2 percent of total securities issued by BIHL, have been sold by Sanlam Emerging Markets. The total on-market sale value of the transaction was P2,035,629,810.39. Further, 48,603,320 shares representing 17.2 percent shares have been sold by African Life. The total on-market sale value of the transaction was P850,072,066.80. “SanlamAllianz acquired the shares sold by Africa Life Assurance Company Botswana (Pty) Ltd and Sanlam Emerging Markets (Pty) Ltd respectively,” BIHL said when cautioning the market. “The 164,991,531 shares represent 58.4 percent of total securities issued by BIHL.” The transaction, according to a statement by BIHL, was subject to certain suspensive conditions and the board of directors advised shareholders that all the suspensive conditions were satisfied. The transaction has become unconditional, and will be implemented according to its terms, with a legal effective date of 4 September 2023,” the board of BIHL updated the market this week. Tightening the grip on the African market The two parties say they are creating a leading pan-African financial services group with an extensive footprint across the African continent. BIHL says the shareholding split of Sanlam and Allianz in SanlamAllianz is agreed at 60:40, respectively. However, this may be subject to change once the post-closing reviews are performed to obtain the final SanlamAllianz shareholding split. According to SA media, Allianz can increase its shareholding to a maximum of 49 percent over time. A joint statement released by both parties early this year said South Africa, where Sanlam is the leading insurer, is excluded from the agreement. Locally, shareholders were reminded that “the transaction does not have any bearing on the operations of BIHL as the ultimate control of the Group will remain with Sanlam”. BIHL and its subsidiaries underwrite all classes of long-term insurance, administer deposit administration schemes, manage investments, and administer life and pension funds. BIHL directly owns and controls Botswana Insurance Fund Management Limited (BIFM), which is licensed as an asset management firm; and Botswana Life Insurance Limited (BLIL), which is licensed as a life insurer. Both BIFM and BLIL are industry leaders in their respective financial services industry. BIHL further holds a stake in five associate companies, namely Letshego Holdings, a microfinance firm; Botswana Insurance Company Limited (BIC), a short-term insurance provider; Nico Holdings PLC and Aflife Holdings Zambia, both of which operate outside Botswana. Through its stake in BIHL, SanlamAllianz indirectly has interests in these companies. Sanlam also recently swallowed Africentric Investments Corporation when the Competition Authority “unconditionally” approved the proposed acquisition of between 51 percent to 74.65 percent of shares of Afrocentric Investment Corporation Limited by Sanlam Limited and Sanlam Life Insurance Limited (both as the acquiring enterprises). AfroCentric Group operates a range of healthcare-related enterprises that provide specialised medical scheme administration and deliver a range of healthcare products and services to the public and private healthcare sectors. AHA holds the operating entities of the AfroCentric Group. The target enterprise operates predominantly in South Africa, but also has limited activities in Botswana, Namibia and Mauritius. In Botswana, CA says AfroCentric’s only interest is through its indirect minority shareholding in Associated Fund Administrators Botswana (Pty) Ltd (AFA), which is coupled with de facto minority protections. This interest is held through Medscheme Holdings (Pty) Ltd, a wholly owned subsidiary of AfroCentric HealthRF (Pty) Ltd, which itself is a subsidiary of ACT Healthcare Assets (Pty) Ltd (AHA). Sanlam, through Sanlam Life already enjoys minority control over AHA. AFA operates within the supplier base of the Botswana healthcare sector by providing medical aid administration and health management services to medical funds across the country. In its assessment of Substantial Lessening of Competition, the Competition Authority proposed transaction involve an acquisition of shares by an entity which is not horizontally or vertically related to the target enterprise. Therefore, CA believes the proposed merger is not expected to reduce the level of competition in the relevant market in Botswana. “The structure of the relevant market will not change post-merger since the merging parties are not active in the same market,” the authority said, adding that the proposed transaction will not result in a market share accretion of the merged entity or any other entity in Botswana. “In terms of public interest, the Authority does not foresee any detriment to matters of public interest that will arise as a result of the proposed transaction.” Preceding that, Allianz Strategic Investments S.à.r.l. acquired 100 percent of the issued share capital in Innovation Group Holdings Limited. Allianz Strategic is part of Allianz Group, the ultimate parent of which is Allianz SE. The Acquiring Group is primarily active in insurance and asset management, and it provides a broad range of personal and corporate insurance services. The Acquiring Group is active in Botswana, through its South African-based subsidiaries Allianz Global Corporate & Specialty South Africa Limited (AGCS) and Allianz Trade Services South Africa (Pty) Ltd. AGCS South Africa offers tailored corporate insurance solutions for companies in all industries and its services include property insurance, financial lines insurance, liability insurance, energy and construction insurance and commercial insurance solutions. AGCS South Africa also offers access to complementary products and services of the acquiring group as well as specialist risk management and consulting support. Furthermore, the acquiring group, through Allianz Trade, provides trade credit insurance and surety bonds. The acquiring enterprise and the Allianz Group did not control any firms or hold any assets in Botswana until the recent transactions. Innovation Group, which was being bought, is a company incorporated in accordance to the Laws of England and Wales. It is a holding company, and it operates primarily in Germany, the United Kingdom, and South Africa, and has smaller operations in the United States of America and Australia. Innovation Group has three major operations being motor, service plan and warranty maintenance and property. In Botswana, Innovation Group controls and operates through its local subsidiary, Business Process Innovation Botswana (Pty) Ltd [IG Botswana]. IG Botswana primarily provides services in relation to automotive products such as service plans, maintenance plans and warranty plans which are provided to selected motor manufacturers operating in Botswana. Strategic direction What Sanlam wants, according to its strategic direction, is an uncontaminated market. Allianz seems to share the same vision. The Sanlam Group has a direct presence in more than 11 African countries, as well as in India and Malaysia and niche businesses in certain developed markets. Allianz’s strategic direction seems to be like that of Sanlam. Around 2020, the German insurer concluded a large and strategic partnership with Jubilee Holdings Limited, the largest insurance group in East Africa, which targeted the five African countries where Jubilee Insurance operated. The agreement covered Jubilee’s non-life operations in Kenya, Tanzania and Uganda and its short-term insurance segment in Burundi and Mauritius. Allianz is also muscling its way into North Africa and West Africa, targeting countries like Morocco, Algeria, Egypt, Senegal, Côte d’Ivoire, Nigeria, Cameroon and Gabon. According to The Africa Report , Allianz Africa, which is part of Allianz Group, is bullish about the region’s prospects. Allianz Africa believes that with its youthful population, expanding middle class, rampant smartphone adoption and a bigger Diaspora migrating back home, Africa’s insurance market has newly emerging power. One reason Allianz Africa’s optimism is the continent’s relatively low insurance penetration rate: it stood at under 3 percent in 2019, compared with the global average penetration rate of above 7 percent. Allianz has more than a century of history in Africa where it has built and is continually expanding its footprint. It is currently present in 12 countries across the continent. Its joint venture with Sanlam, according to several analysts, will share the same vision, and that is to grow together rather than compete. Both companies seem to be ready to undertake acquisitions, wherever possible, to ensure that they increase market share and eliminate competition. With their Joint Venture operating in more than 29 African countries, and with an appetite and a fat chequebook, growth prospects for the JV will surely conquer Africa. [/ihc-hide-content]

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The Sanlam-Allianz Grip

A joint venture between two colossal insurance firms, German outfit Allianz SE and Cape Town headquartered Sanlam, will create Africa’s largest insurance juggernaut

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The Sanlam-Allianz Grip

A joint venture between two colossal insurance firms, German outfit Allianz SE and Cape Town headquartered Sanlam, will create Africa’s largest insurance juggernaut

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