Wrap Text
Joint announcement regarding the acquisition by Santam Limited of the A1 Ordinary Shares In NMS Insurance Services
SANLAM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1959/001562/06)
JSE & A2X Share Code: SLM; NSX Share Code: SLA
ISIN: ZAE000070660
("Sanlam")
SANLAM LIFE INSURANCE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/021121/06)
Bond Issuer Code: BISLI
LEI: 378900E10332DF012A23
("Sanlam Life")
SANTAM LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1918/001680/06
LEI: 37890092DC55C7D94B35
ISIN: ZAE000093779
JSE share code: SNT, A2X share code: SNT, NSX share code: SNM
Bond company code: BISAN
("Santam" or the "Company")
JOINT ANNOUNCEMENT REGARDING THE ACQUISITION BY SANTAM LIMITED OF
THE A1 ORDINARY SHARES IN NMS INSURANCE SERVICES (SA) LIMITED FROM
SANLAM LIFE INSURANCE LIMITED
1. INTRODUCTION
Sanlam and Santam's shareholders and noteholders are referred to the announcement
released by Sanlam on 18 June 2024, regarding the acquisition by Sanlam Life (a wholly
owned subsidiary of Sanlam) of a 60% shareholding in MultiChoice Group Limited's
("Multichoice") insurance business, NMS Insurance Services (SA) Limited ("NMSIS"), for an
initial upfront cash consideration of R1.2 billion, together with a potential earn-out payment of
up to R1.5 billion contingent upon the total gross written premium ("GWP") generated by
NMSIS for the year ending 31 December 2026 (the "Sanlam Transaction").
The NMSIS shares comprise two separate classes of shares, the Ordinary Shares, which
entitle the holder to distributions related to the life insurance products, and the A1 Ordinary
Shares, which entitles the holder to distributions related to the general insurance products.
Completion of the Sanlam Transaction is targeted for the fourth quarter of 2024 – i.e. subject
to regulatory approval.
Santam has entered into a Framework Agreement and a Sale and Purchase Agreement
(collectively referred to as the "Agreements") with Sanlam Life to acquire its 60% interest in
the A1 Ordinary Shares in NMSIS for an initial cash consideration of R925 million, with a
potential deferred payment as detailed herein below (the "Transaction").
NMSIS is a registered South African composite micro-insurer and authorised financial services
provider and is licensed to underwrite both general and life insurance products in South Africa.
It has been underwriting insurance cover for the past 20 years under the DStv brand of
MultiChoice focussing on device, installation, funeral, subscription waiver and debt waiver
insurance products.
2. RATIONALE FOR THE TRANSACTION
Sanlam Strategic Rationale:
The Sanlam Transaction enables Sanlam, through its Sanlam Fintech cluster, to advance its
strategy of utilizing technology to expand access to financial services across Africa. This
strategic initiative aligns with Sanlam's core purpose of helping Africans achieve financial
confidence.
MultiChoice's extensive subscriber base offers Sanlam, and its affiliates, a unique platform
and attractive opportunity for cross-selling and cost-effective marketing to an actively engaged
subscriber base.
Santam, a leading general insurer in South Africa, operates as a subsidiary of Sanlam and is
best placed to drive the growth of the general insurance offering to the MultiChoice South
Africa subscriber base.
Santam Strategic Rationale:
Exploring new markets through partnerships is a key strategic pillar and growth vector for
Santam. A partnership between Santam and MultiChoice is aligned with this strategy and
presents a unique opportunity to create substantial mutual value, including:
• Santam to leverage its experience in device insurance to increase the penetration of
related general insurance products into the Multichoice subscriber base.
• MultiChoice's integrated payments platform has the potential to present a solid
foundation for offering affordable value-added general insurance products to drive
financial inclusion sustainably through frictionless bundling of payments for services.
• Through an active subscriber base with approximately 8.6 million subscribers in
South Africa, MultiChoice provides a robust and scalable channel to Santam for
distributing tailored general insurance products.
The partnership will be limited to the South African client base.
3. TRANSACTION CONSIDERATION
Santam will pay Sanlam Life an initial purchase consideration of R925 million in cash, funded
from existing cash resources.
The Sanlam Transaction includes a potential earn-out payment of up to R1.5 billion in respect
of both the A1 Ordinary Shares and the Ordinary Shares. Santam's potential contribution to
the earn-out payment will be contingent upon the GWP relating to the general insurance
products currently written by NMSIS for the year ending 31 December 2026, exceeding the
GWP projection included in the valuation. The current general insurance book of NMSIS is
mature, and it is expected that any earn-out payable by Santam will be limited.
4. FINANCIAL INFORMATION
4.1. NMSIS has built a sizable insurance book amounting to 3.3 million in-force policies at
31 March 2024, of which a significant portion relates to general insurance.
4.2. NMSIS's key financials for the year ended 31 March 2024, audited and prepared in
terms of IFRS, were as follows:
4.2.1. GWP increased 36% year-on-year to R970 million.
4.2.2. Profit after tax increased by 51% to R296 million.
4.2.3. The net asset value of NMSIS was R277 million.
5. EFFECTIVE DATE
The Transaction will be effective within 10 business days from the date on which the last of
the conditions precedent contained in the Agreements have been fulfilled.
6. MATERIAL TERMS AND CONDITIONS PRECEDENT
The Agreements provide for customary warranties, indemnities, events of default, interim
period and other undertakings that are standard for a transaction of this nature, including
obtaining of necessary regulatory approvals from the South African competition and regulatory
authorities by no later than 31 March 2025 (or such later date as agreed between the parties).
The conditions precedent includes the Sanlam Transaction becoming unconditional.
7. CATEGORISATION AND RELATED PARTY CONSIDERATIONS
In terms of the JSE Limited ("JSE") Listings Requirements, the Transaction is below the
Category 2 threshold for Sanlam and the disclosure in the announcement is, therefore, made
on a voluntary basis.
Sanlam is the controlling shareholder of Santam and as such, the Transaction constitutes a
small, related party transaction in terms of Section 10.7 of the JSE Listings Requirements for
Santam. Accordingly, Santam is required to provide the JSE with written confirmation from an
independent professional expert confirming whether the terms and conditions of the
Transaction are fair insofar as the Santam shareholders are concerned.
8. INDEPENDENT FAIRNESS OPINION
In compliance with paragraph 10.7(b) of the JSE Listings Requirements, Ernst & Young
Advisory Services (Pty) Ltd was appointed by Santam as the independent professional expert
and has furnished the Santam Board of directors with its opinion ("Fairness Opinion")
expressing that the terms of the Transaction are fair to Santam's shareholders.
The Fairness Opinion has been reviewed by the JSE and Santam's shareholders are advised
that the Fairness Opinion is available for inspection at Santam's registered office for a period
of 28 calendar days from the date of this announcement.
Cape Town
28 November 2024
JSE Equity Sponsor to Santam
Investec Bank Limited
JSE Debt Sponsor to Santam
Rand Merchant Bank (a division of FirstRand Bank Limited)
NSX Sponsor to Santam
Simonis Storm Securities (Pty) Ltd
A Member of the Namibian Stock Exchange
Legal Advisor to Santam
Reidlaw (Pty) Ltd
JSE Equity Sponsor to Sanlam
The Standard Bank of South Africa Limited
JSE Debt Sponsor to Sanlam Life Insurance
The Standard Bank of South Africa Limited
NSX Sponsor to Sanlam
Simonis Storm Securities (Pty) Ltd
A Member of the Namibian Stock Exchange
Legal Advisor to Sanlam
ENSafrica
Date: 28-11-2024 05:50:00
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