Sanlam Life Insurance plans to acquire a 25% stake in African Rainbow Capital Financial Services Holdings (ARC FSH) for R2.41 billion cash and part of the deal will be the sale of its 25% stake in ARC Financial Services Investments (ARC FSI) for R1.49bn.
The sale in ARC FSI would be done via the issue by ARC FSH of ordinary shares to the value of R1.49bn, to Sanlam Life. Sanlam’s share price fell 3.53% to R85.75 yesterday.
ARC FSH is the investment holding company for all the financial services investments of the Ubuntu-Botho Investments (UBI) group of companies, other than its shareholding in Sanlam, which is held directly by UBI.
The deal generated some comment on the X social media platform with, for instance, Michael Jordaan (@MichaelJordaan) commenting that: “Sanlam buying 25% of TymeBank for > R2bn is a really big deal. It validates the challenger banking model. It shows that bancassurance is alive and well. And it provides ARC with firepower to keep investing in start-ups.”
Ivyn Sambo (@IvynSambo) commented: “In other news Sanlam is buying 25% of TymeBank for R2bn! TymeBank is SA’s fastest growing bank with over 9 million customers!”
And Ntuthuko Makhombothi (@IamMakhombothi) said: “Sanlam, Ubuntu-Batho (and) ARC are tied to the hip. Interesting valuation, north of R8bn. They were unprofitable on their AFS for FY23, (and) I remember issues about their going concern position beyond Oct 24. With Sanlam now on board, let’s see what this digital bank can do.”
Once the transaction is complete, ARC FSH will hold 100% of the shares in ARC FSI, together with its existing investments in TymeBank, AI Fund, CrossFin and Ooba.
ARC FSH is currently owned 50.1% by African Rainbow Capital (ARC) and 49.9% by the ARC Fund, a partnership with UBI General Partner Proprietary (UBI GP). ARC and UBI GP are wholly owned subsidiaries of UBI.
UBI is Sanlam's empowerment partner and ARC and Sanlam partner in certain specific strategic initiatives in the financial services sector, towards delivering better customer propositions, increasing competition as well as promoting financial inclusion.
Sanlam had acquired a 25% non-controlling stake in ARC FSI in 2021, which had allowed it to benefit from the growth of the ARC FSI portfolio, strengthen its market presence in South Africa and expand on its financial inclusion imperative.
The proposed transaction was a natural extension of Sanlam’s existing interest in ARC FSI, Sanlam directors said.
They said Sanlam would continue to explore ways to collaborate strategically with ARC FSH and its portfolio investments to enhance competition and to assist Sanlam in providing holistic and integrated product offerings to its clients.
BUSINESS REPORT