March 8, 2018 / 6:33 AM / 11 days ago

Sanlam buys out Morocco's SAHAM Finances in $1 billion African expansion

JOHANNESBURG/RABAT (Reuters) - South Africa’s biggest insurer Sanlam Ltd (SLMJ.J) said on Thursday it will buy the rest of Moroccan insurer SAHAM Finances (SAH.CS) for $1 billion, as part of its plan to become a Pan-African insurance group.

The deal will give Sanlam, valued at more than $16 billion, access to SAHAM’s fast-growing African business in 26 countries through 65 subsidiaries across the continent.

SAHAM has been following the trail of Moroccan banks which have been moving to sub-Saharan countries, part of the kingdom’s strategy to grow its influence in Africa.

SAHAM Finances is owned by Groupe SAHAM, founded in 1995 by Moroccan tycoon Moulay Hafid Elalamy who is also the country’s trade and industry minister. Morocco returned a year ago to the African Union with King Mohammed VI spearheading investment and development projects.

The deal underscores the attractiveness of firms on the Casablanca bourse where SAHAM is listed, which the government has been promoting as a pan-African trade hub. However, deals of this size are rare on the bourse.

“With its thorough African expertise and its strong commitment to address large-scale projects, SAHAM group will transform into a Pan-African investment fund, with the ambition of strengthening its position as a strategic continental economic player,” SAHAM said in a statement.

Under the deal, Sanlam Emerging Markets Ireland Ltd (SEMIL), a unit in a joint-venture with South African insurer Santam Ltd (SNTJ.J) would buy all shares of SAHAM, which currently holds the stake in SAHAM Finances not already owned by SEMIL, the firms said in a statement.

SEMIL, an investment vehicle, first bought a 30 percent stake in SAHAM Finances in February 2016 and bought 16.63 percent more in May 2017.

“It’s a good deal for Sanlam. It certainly gives them a very strong position in Africa, there is no one that is able to compete with their footprint now,” said an analyst who did not want to be named.

“They will be free to do a lot more that they’ll like to do in terms of unlocking value or see how they can structure the business better than what it was previously.”

    SEMIL is a unit of SAN JV Proprietary Ltd, a special purpose vehicle owned by Sanlam’s emerging markets unit and Santam (SNTJ.J).

    The deal will be funded with a combination of available capital, debt facilities and the issuance of equity instruments, Sanlam and Santam said in a joint statement.

    Under the deal SAHAM will also buy out shares in French group Wendel, it said, without giving details.

    Sanlam separately reported a 1.4 percent drop in full-year profit, hurt by recession in its home market.

    Sanlam’s stock was down 0.16 pct to 94.84 rand while Santam is up 1.27 percent to 325.09 rand. SAHAM’s stock was suspended on the Casablanca bourse.

    Reporting by Arathy S Nair in Bengaluru, Zakia Abdennebi in Rabat, Ulf Laessing in Tunis and Nqobile Dludla in Johannesburg; Writing by Ulf Laessing; Editing by Gopakumar Warrier and Alexander Smith

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