Absa will exchange its asset management business, with a book of 238 billion rand, for an up to 17.5% stake in Sanlam Investment Holdings (SIH), they said in a joint statement.
SIH is a subsidiary of Sanlam that is 25% owned by billionaire Patrice Motsepe's African Rainbow Capital Financial Services. It currently has assets under management, administration and advice of 879 billion rand, Sanlam said.
Clients of the combined business will benefit from a wider range of investment solutions, the joint statement continued, adding it would also see increased investment in research and technology.
"We are confident that this transaction will strengthen our ability to deliver investment excellence for customers through our ability to further invest," Sanlam CEO Paul Hanratty said.
"For Absa, the transaction delivers improved scale, capabilities, customer propositions and transformation, all of which we view as essential to achieving growth... in the sector," Absa's interim chief executive Jason Quinn added.
Another Sanlam subsidiary, Glacier Financial Services, also plans to acquire Absa's market-linked investment service provider business, while Glacier will become the preferred provider of these services for certain Absa intermediaries.
That transaction is dependent on the conclusion of the asset management deal, which is in turn dependent on certain conditions and regulatory approvals, though it is expected to occur in the first half of 2022.
Absa will meanwhile enter into a 10-year distribution agreement with SIH, meaning the combined business will use the distribution networks of both Sanlam and Absa, broadening its reach, the statement said.
($1 = 15.0997 rand)
(Reporting by Emma Rumney; editing by Jason Neely, Kirsten Donovan)
