S. Africa’s Sanlam strikes money management deal – Pensions & Investments

South African insurance group Sanlam has agreed to establish one of the largest Black-owned money management firms in the country through a deal with African Rainbow Capital Financial Services.

The deal will see ARC FS take a 25% stake in Sanlam’s South African third-party money management business, Sanlam Investments. The money management firm had 448 billion rand ($39.9 billion) in assets under management as of Dec. 31. Its AUM split is about 45% institutional and 55% retail, Robert Roux, CEO of Sanlam Investment Group, said in an email.

Under the terms of the deal, ARC FS will purchase shares in a new holding company that will be a wholly owned subsidiary of Sanlam, housing the money manager. With an anticipated completion date of Dec. 1, the purchase price will be 815.2 million rand, the release said. The price is subject to adjustments.

Sanlam Investments runs strategies across a number of asset classes and also includes Satrix, the firm’s index-tracking unit.

“The transaction will give the business very strong (broad-based Black economic empowerment) credentials, which will give us a competitive advantage in the institutional space,” Mr. Roux said.

Nersan Naidoo will remain CEO of the business.

In October 2018, Sanlam announced a series of broad-based Black economic empowerment transactions, aimed at enhancing the firm’s competitiveness in South Africa. It said at the time it would engage in an internal reorganization of its South African businesses that run third-party assets and sell a stake to ARC FS, which is a wholly owned subsidiary of Ubuntu-Botho Investments. Ubuntu-Botho Investments was created in 2004 with an initial main purpose of building Black-controlled capital by being an “empowerment partner” to Sanlam.

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