Sanlam announced this week that it has submitted a letter to the board of AfroCentric Investment Corporation Limited (AfroCentric), expressing Sanlam’s intention to acquire AfroCentric shares that would result in Sanlam acquiring a controlling shareholding in its business.
Sanlam, through Sanlam Life Insurance, currently holds 28.7% in ACT Healthcare Assets, which holds AfroCentric’s businesses, including medical scheme administrator Medscheme and pharmacy businesses Pharmacy Direct and Activo.
In terms of the proposed transaction, Sanlam intends to acquire no less than 36.9% of AfroCentric shares at an offer price of R6 a share. AfroCentric shareholders have the option to receive the purchase consideration in cash or in Sanlam shares.
In addition, Sanlam seeks to transfer its shareholding in ACT Healthcare Assets to AfroCentric in exchange for an equal (28.7%) shareholding in the AfroCentric Group as a whole.
These transactions will result in Sanlam having a controlling shareholding in the AfroCentric Group, with the final shareholding dependent on the percentage of AfroCentric shareholders that accept Sanlam’s offer.
Sanlam said its motivation for the offer was that consumers need affordable and reliable health care. Sanlam intends to expand its client proposition to provide a more holistic product offering, including medical scheme cover and health insurance.
Through this transaction, Sanlam will be able to integrate AfroCentric’s product offering into its ecosystem, while AfroCentric will gain increased access to the wide Sanlam distribution network. AfroCentric’s client base will also benefit from access to the overall Sanlam product offering, and vice versa.
“AfroCentric is focused on delivering affordable medical aid and health insurance products which complements Sanlam’s purpose of enabling its clients to be financially secure and prosperous. Sanlam has an excellent offering in the employee benefits market and by offering medical aid and health insurance alongside its other benefits, Sanlam will be able to create a simpler and more convenient solution for employers,” Sanlam said.
Sanlam believes in the long-term growth potential of AfroCentric and the businesses’ combined abilities to deliver a differentiated proposition in the healthcare sector. This will be done through developing bespoke healthcare solutions and enhanced commercial visibility through increased marketing and Sanlam co-branding at the administrator level.
Sanlam’s relationship with AfroCentric dates to 2015, when it embarked on a strategic venture in the healthcare sector by opting to partner with the majority black-owned company, which operates in South Africa, Botswana, Mauritius and Namibia.
