Business

Major team-up for South Africa’s largest insurer and largest asset manager

Luke Fraser

 ·20 Nov 2024

Sanlam, South Africa’s largest insurer and Ninety One, South Africa’s largest asset manager have joined forces.

As per the proposed transaction, Ninety One will acquire all the issued shares in Sanlam Investment Management Proprietary Limited (SIM), which is an active investment management business wholly owned by Sanlam Investment Holdings Limited (SIH), in which the broader Sanlam Group holds an effective 65.6% interest.

Sanlam is also appointing Ninety One as the permanent investment manager to manage assets for Sanlam Investments UK Limited (SI UK), which is a wholly owned subsidiary of the Sanlam Group.

These two businesses owned by Sanlam have a combined R400 billion in assets under management, which will be moved to Ninety One.

Ninety One, which has operations in South Africa and the UK, already has assets under management of £127.4 billion (R2.9 trillion).

Sanlam will also be an anchor investor in Ninety One’s international private and specialist credit strategies that meet its investment requirements.

For the transaction, the Sanlam Group will receive an approximate 12.3% equity stake in Ninety One through a combination of Ninety One Limited and Ninety One plc shares.

The move is still subject to necessary approvals, but Ninety One believes that the agreement will boost its market leadership position in South Africa.

Ninety One results

The news comes amidst a slight hit in Ninety One’s results.

“During this reporting period, Ninety One benefited from positive performance in equity and bond markets. Demand for risk-on strategies, especially in emerging markets, remained muted. This affected our ability to produce new business at historic rates,” said Ninety One CEO Hendrik du Toit.

“It is encouraging to note that we have experienced a significant improvement in inflows and business opportunities since September.”

“Looking ahead, we are encouraged by an environment of lower interest rates, broadening markets and an improving new business pipeline. This optimism should be tempered by the elevated levels of political risk in the world in which we operate.”

In its interim results for the six months that ended 30 September 2024, Ninety One was supported by positive markets but saw disappointing flows for reasons relating to risk appetite and investor demand for most of the areas it operates.

“We are proud of the fact that we have maintained the underlying levels of profitability and contained costs while funding ambitious investment in future growth,” said Du Toit.

“The Sanlam agreement is a strategic milestone, enhancing our financial strength and aligning with our growth objectives.”

“Since September, we have seen an improvement in flows and pipeline, which gives us confidence that the worst is behind us. While market conditions remain uncertain, we are focused on the long-term.”

“With strengthened investment performance and a growing pipeline, Ninety One is optimistic about regaining business momentum and capturing opportunities in emerging and global markets.”

Despite the optimism, the group’s recent financial results show a 10% drop in profit before tax to £93.3 million (R2.1 billion).

Amidst a 12% drop in basic and headline earnings per share to 7.8 pence (R1.79), the group also dropped its interim dividend by 8% to 5.4 pence (R1.24).

Read: Another major happy turn for businesses in South Africa