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Sanlam and Absa to merge their investment management operations

  • Sanlam Financial Services and Absa Banking Group announced on Tuesday (5 October) that they have agreed to merge their investment management businesses in a transaction that will result in an asset management company with assets under management, administration, and advice totaling more than R1 trillion.
  • Absa will swap its investment management company, Absa Investments, for a share in Sanlam Investment Holdings Proprietary Limited worth up to 17.5 percent (SIH).
  • SIH is Sanlam’s third-party asset management company, in which ARC Financial Services Investments Proprietary Limited (ARCFS) has a stake.
  • The transaction’s effective date will be determined by the fulfillment of various requirements, including regulatory clearances (such applications will be made to the appropriate regulators in due course), and is scheduled to take place in the first half of 2022.

Sanlam and the Absa banking group have agreed to merge their investment management operations in a transaction that would result in the establishment of an asset management firm with assets under management, administration, and advising totaling more than R1 trillion. 

As part of the agreement, Absa would exchange its investment management firm, Absa Investments, for up to 17.5 percent of Sanlam Investment Holdings Proprietary Limited. The transaction is scheduled to conclude by the end of the year (SIH). Absa Investments is divided into four divisions: Absa Asset Management, Absa Alternative Asset Management, Absa Fund Managers (save for the Absa Prudential Money Market Fund), and Absa Multi Management.

ARC Financial Services Investments Proprietary Limited (ARCFS) is a third-party asset management business owned by Sanlam in addition to being a shareholder in SIH. In the current state of affairs, ARCFS owns a 25% effective interest in SIH due to its 25% investment in SIH’s holding company, with Sanlam owning the remaining 75%.

As part of the transaction, Absa will enter into agreements with Glacier by Sanlam to sell its market Linked Investment Services Provider (LISP) business to Satrix, a subsidiary of SIH. Absa will also enter into agreements with Glacier by Sanlam to sell to Satrix its market Linked Investment Services Provider (LISP) business.

The execution of agreements to give effect to the LISP transaction is a prerequisite to the completion of the investment management transaction.

Absa will also enter into a 10-year distribution agreement with SIH, which implies that the enlarged operations will be able to utilise both Sanlam and Absa’s distribution networks, significantly increasing the market reach of the bigger SIH.

The effective date of the transaction will be decided by the fulfillment of numerous suspensive criteria, including regulatory approvals (which will be submitted with the applicable regulatory authorities in due course), and is expected to occur in the first half of 2022.

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