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The creation of a Pan-African Joint Venture between Sanlam and Allianz SE and withdrawal of cautionary announcement
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")
ANNOUNCEMENT RELATING TO THE CREATION OF A PAN-AFRICAN JOINT VENTURE BETWEEN SANLAM
AND ALLIANZ SE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements dated 22 December 2021,
03 February 2022 and 18 March 2022, in which it was advised that Sanlam and Allianz
SE (“Allianz”), a global integrated financial services group with its holding
company listed on the Frankfurt Stock Exchange, were exploring various strategic
alternatives in relation to their respective African business units (excluding
South Africa). Shareholders are advised that the parties and certain of their
associated entities have entered into definitive agreements in respect of a long-
term strategic joint venture (the “Joint Venture” or “JV”) arrangement regarding
their operations on the African continent, outside of South Africa. Sanlam and
Allianz will contribute their respective African operations into a newly
incorporated joint venture company (“JVCo”), creating a leading Pan-African
financial services group with an extensive footprint across the African continent
(the “Proposed Transaction”). In line with both parties’ long-term commitment to
the strategic partnership and the continent, the parties have agreed to remain
invested in the JV for a period of at least 10 years.
Sanlam, through its wholly owned subsidiary Sanlam Emerging Markets Proprietary
Limited (“SEM”) and its associated entities currently have life and general
insurance, as well as investment management operations in more than 30 countries,
including Morocco, Ivory Coast, Nigeria and Botswana, while Allianz’s insurance
portfolio spans 11 countries, excluding South Africa, including operations in
Egypt, Kenya, Cameroon and Uganda.
2. BACKGROUND TO ALLIANZ
Allianz is a global integrated financial services group operating in the insurance
and asset management sectors. Serving over 126 million customers in more than 70
countries globally and employing more than 155,000 employees worldwide. Allianz
has more than 100 years of heritage in Africa, with presence since 1912 and a
strong presence in key African countries such as Egypt, Kenya, Cameroon and Uganda,
with an insurance portfolio spanning 11 countries, excluding South Africa, serving
approximately 2 million customers, with its approximately 2,600 employees. Allianz
prides itself in delivering leading international insurance programs across Africa
and is committed to building Pan-African leadership in all relevant markets.
3. RATIONALE FOR THE PROPOSED TRANSACTION
In line with Sanlam’s stated strategy to become a leading Pan-African financial
services group by driving operational excellence in core markets and selective
expansion into high priority countries, the Proposed Transaction will enable
Sanlam to enhance its capabilities in existing markets and expand its footprint
and market leading positions in certain key jurisdictions on the African continent.
In addition, Sanlam sees a number of strategic benefits in entering into the
Proposed Transaction, which include:
• enabling a strategic partnership with one of the largest financial services
groups and insurers in the world, leveraging Allianz’s broad expertise and
capabilities;
• accelerating Sanlam’s expansion into high priority countries, further
strengthening Sanlam’s position in markets core to Sanlam’s African strategy
and optimizing the existing Pan-African portfolio;
• developing Sanlam’s innovative existing strategic partnerships and enhancing
Sanlam’s digitally enabled distribution network across a best in class product
offering;
• maintaining disciplined capital allocation, maximizing value creation for both
Sanlam and Allianz and their respective stakeholders; and
• jointly with Allianz, benefiting from knowledge sharing, economies of scale, a
combined platform as well as potential synergies for JVCo and Sanlam.
4. OVERVIEW OF THE PROPOSED TRANSACTION
4.1 STRUCTURE
Sanlam will hold the controlling interest in the JVCo, with Allianz holding a
significant minority shareholding with commensurate governance rights and minority
protections. The initial shareholding split of Sanlam and Allianz in the JVCo,
will be 60:40 respectively, with the ability for Allianz to increase its
shareholding to a maximum of 49% over time. The proposed structure envisages the
below transaction steps, subject to various conditions precedent, as outlined in
paragraph 4.3 below.
SEM and its associated entities will contribute their African assets (excluding
South Africa, Continental Re and SEM's Namibian subsidiaries but including its
90% shareholding in SAN JV (RF) Proprietary Limited ("San JV"), for a 60%
shareholding in JVCo.
Allianz will contribute all its African assets (including its minority stake in
African Reinsurance Corporation and its shareholding in Jubilee’s general
insurance businesses in Kenya, Uganda and Burundi).
As per the cautionary announcements published by Santam Limited (“Santam”), last
renewed on the 18 March 2022, Allianz is currently in discussions with Santam to
acquire its 10% shareholding in SAN JV and, to the extent that that transaction
is concluded and implemented, Allianz will also contribute its 10% shareholding
in San JV to JVCo. Allianz's contributions will be exchanged for a 40% shareholding
in the JVCo.
Sanlam’s operations in Namibia will be contributed to JVCo at a later stage, and
at a time when Allianz will also have the option to increase their shareholding
in the JVCo to 49%.
Sanlam’s operations in India, the Middle East and Malaysia will not be contributed
to JVCo.
4.2 FINANCIAL INFORMATION
The parties will contribute their respective assets based on Appraisal Value
(“AV”), which is determined based on the various businesses’ contribution to Group
Equity Value (“GEV”) plus the value of future new business, as at 30 June 2021.
The initial shareholding split of Sanlam and Allianz in the JVCo, will be 60:40
respectively, determined based on relative AV.
The total GEV of the contemplated JVCo assets are expected to be in excess of €2
billion / ZAR33 billion1, with the JVCo combined attributable net income associated
with these contemplated assets in excess of €25 million / ZAR420 million(1) as at
30 June 2021 (net income for the first six months) of which Sanlam’s attributable
net income is in excess of €15 million / ZAR254 million (1).
As per Sanlam’s accounts as at 30 June 2021 (prepared in terms of IFRS), the
aggregated net asset value of Sanlam’s contemplated contributed assets was €1.3
billion / ZAR 22 billion1.
4.3 CONDITIONS PRECEDENT
The Proposed Transaction is subject to certain suspensive conditions, including
but not limited to the relevant approvals from the competition authorities,
regulatory authorities, and any customary conditions that are required to be
satisfied by Sanlam and Allianz respectively for each jurisdiction.
4.4 WARRANTIES AND INDEMNITIES
The definitive transaction agreements to give effect to the Proposed Transaction
contain warranties and indemnities customary for transactions of this nature.
4.5 EFFECTIVE DATE
The effective date of the Proposed Transaction will be dependent on the fulfilment
of the suspensive conditions to the Proposed Transaction and is expected to occur
within 12-15 months of this announcement.
5. CATEGORISATION OF THE PROPOSED TRANSACTION
The Proposed Transaction constitutes a Category 2 transaction for Sanlam in terms
of Section 9 of the JSE Limited Listings Requirements and accordingly no Sanlam
shareholder approval is required.
6. INVESTOR AND ANALYST CONFERENCE CALL
A conference call for analysts and investors will take place at 16h00 (South
African time) today, 4 May 2022. Investors and analysts who wish to participate
in the conference call should register as indicated below.
(1) Assumed EUR/ZAR exchange rate of 16.93 as at 30 June 2021
Audio dial-in facility
A dial-in facility will be available. Those wishing to participate in the
conference call should register by navigating to
https://www.diamondpass.net/2768645.
Registered participants will receive their dial-in number upon registration. For
assistance, please contact Sanlam Investor Relations at +27 21 947 8455.
Recorded playback will be available until 9 May 2022.
Access Numbers for Recorded Playback:
Access code for recorded playback: 42225
South Africa 010 500 4108
USA and Canada 1 412 317 0088
UK 0 203 608 8021
Other Countries +27 10 500 4108
For further information on Sanlam, please visit our website at www.sanlam.com.
7. WITHDRAWAL OF CAUTIONARY ANNOUNCEMNT
Shareholders are further advised that, following the release of this announcement,
caution is no longer required to be exercised by shareholders when dealing in the
Company’s securities.
Bellville
4 May 2022
Enquiries
Sanlam Investor Relations Phone: +27 21 947 8455
Email : ir@sanlam.co.za
Financial adviser and Transaction Sponsor to Sanlam
J.P. Morgan
Lead Legal adviser to Sanlam
Webber Wentzel
English Law Legal adviser to Sanlam
Allen & Overy
FORWARD LOOKING STATEMENTS
In this announcement we make certain statements that are not historical facts and
relate to analyses and other information based on estimates and/or forecasts of future
results not yet determinable, relating, amongst others, to new business volumes,
investment returns (including exchange rate fluctuations), solvency ratios, GEV and
actuarial assumptions. These statements may also relate to our future prospects,
developments and business strategies. These are forward-looking statements as defined
in the United States Private Securities Litigation Reform Act of 1995. Words such as
“believe”, “anticipate”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavor”
and “project” and similar expressions are intended to identify such forward-looking
statements but are not the exclusive means of identifying such statements. Forward-
looking statements involve inherent risks and uncertainties and, if one or more of
these risks materialise, or should underlying assumptions prove incorrect, actual
results may be very different from those anticipated. Forward-looking statements apply
only as of the date on which they are made, and Sanlam does not undertake any obligation
to update or revise any of them, whether as a result of new information, future events
or otherwise. Any forward-looking information contained in this announcement has not
been reviewed and reported on by Sanlam’s external auditors.
Date: 04-05-2022 07:05:00
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