Leading pan-African financial services group Sanlam has bought the remaining 53.4% stake in Morocco’s Saham Assurance that it does not already own in a US$1.05-billion deal.
The deal, reached in early March, will make the South Africa-headquartered Sanlam the largest non-banking financial services group in Africa, while Saham is the biggest insurer on the continent outside of South Africa. Saham’s insurance business, which started its strategic development in Africa in 2010, is present in 26 countries through 35 insurance companies.
The deal will be funded by a combination of available capital, debt facilities, and the issuance of equity instruments, Sanlam and Santam said in a joint statement. The buyout is subject to approval by regulators, that will be followed, in accordance with Moroccan stock market regulations, by an offer for a takeover bid of Saham Assurance Morocco’s shares. Saham is listed on the Casablanca Stock Exchange.
Mr Junior Ngulube, Chief Executive of Sanlam Emerging Markets (SEM), said the deal is in line with Sanlam’s strategy to become the leading insurer in Africa and that it would result in an ownership footprint in 19 additional countries, broadening Sanlam’s presence to 33 countries.
“It makes us the ‘go to’ partner for multinationals which are operating across the continent as well as intermediaries of brokers. In addition, we are also becoming the preferred partner of international insurance groups which do not have a footprint in Africa,” he said.
Sanlam, together with subsidiary Santam, first acquired a joint 30% stake in Saham in 2016 and increased that stake by a further 16.6% in 2017.
A welcome move
The takeover of Saham Assurance by Sanlam has been welcomed as an indication of confidence in Morocco, which is increasingly positioning itself as a pan-African development platform in the insurance sector in particular.
“This deal will not change a lot of things from the economic point of view, but it affirms the image of a Morocco that is attracting more investors. In addition, the sale will bring in foreign exchange earnings,” said Mr Farid Bensaid, CEO of the AFMA Group.
He added that the arrival of Sanlam could positively impact the market if the group invests in new niches, given that the potential of the Moroccan insurance market is still not sufficiently exploited.
The takeover deal is a strategic operation for the African insurance market, said S&P. “Both groups are big players on the continent. Sanlam will now have a larger presence in North, West and East Africa and the Middle East. In addition, Sanlam’s expertise in life insurance can be beneficial for the Moroccan market if it offers specific products in this segment,” S&P’s Mr Ali Karakuyu told Matin-Eco.
Insurance penetration in Morocco stood at 3.5% in 2016, with 1.4% for life insurance and 2.1% for the non-life business.
The arrival of a third multinational in the Moroccan market, after Axa and Allianz, is also expected to stimulate competition and bring in new expertise. M