Sanlam has announced a R6.5 billion buyout proposal of life insurer Assupol, aiming to enhance the insurance group’s extensive life and savings portfolio.
The proposed transaction follows a notice sent to Assupol shareholders in April last year, advising them that Budvest (Pty) Ltd, which holds 46.02% of Assupol’s securities, and the International Finance Corporation, which has a 19.41% stake in the company, had expressed their intention to sell their holdings.
On the table is a scheme of arrangement with a fall-back general offer to Assupol shareholders for a purchase consideration of about R6.5bn to acquire up to 100% of the issued ordinary shares. The acquisition will be funded by Sanlam Life Insurance’s cash resources, Bloomberg reported.
Established in 1913 as a burial society for members of the then South African Police, Assupol has grown into a full-fledged life insurer, providing a range of financial products tailored for focused markets to “people from all walks of life”. These include funeral, life, savings, and retirement products and services.
Assupol is listed on the Cape Town Stock Exchange (CTSE).
For its latest financial year ending 30 June 2023, Assupol reported an embedded value of more than R7bn, gross insurance premium revenue of over R5bn, and a solvency cover ratio of 179%.
Last week, Assupol told BusinessTech that the life insurer’s board of directors had considered the terms of the Sanlam offer and resolved to recommend the offer to ordinary shareholders and the holders of the “B” shares in Assupol.
The proposed transaction will see Assupol become part of Sanlam’s retail mass cluster, together with Sanlam Sky, Safrican, and the Capitec joint venture, which will close at the end of October.
Sanlam told News24 on Friday that the acquisition will result in an enhanced product offering, including the ability to capitalise on the businesses’ respective routes to market and leverage cross-selling opportunities.
According to Sanlam Group chief executive Paul Hanratty, the proposed acquisition will place Sanlam in a strong competitive position in the retail mass segment of the South African market.
“Given the envisaged synergies, we are confident it will deliver accretive value for all our stakeholders,” said Hanratty.
If the acquisition goes ahead, Assupol will continue to operate with its own brand and identity and separate management team, Sanlam said in a statement.
Sanlam’s retail mass cluster chief executive, Bongani Madikiza, will oversee the co-ordination of the various retail mass businesses within the group, “as well as make sure they share intellectual property, best practice, and work collectively”.
Assupol’s chairman, Dr Reuel Khoza, said the acquisition will bring opportunities for growth and success.
“It will not only strengthen our position in the market but also enhance our ability to provide exceptional value to our clients,” said Khoza.
The completion of the proposed transaction will be subject to suspensive conditions, including the necessary regulatory approvals.
“The implementation of the scheme of arrangement will be subject to the fulfilment or waiver, as the case may be, of conditions precedent, by 31 January 2025, including Assupol shareholders, CTSE, the Takeover Regulation Panel, the competition authorities, and all other relevant approvals for a transaction of this nature,” Assupol told BusinessTech.
