Multichoice selling majority stake in its big moneymaker – for up to R2.7 billion

 ·18 Jun 2024

Sanlam plans to buy a 60% stake in MultiChoice’s insurance business, NMS Insurance Services Limited (NMSIS), for R1.2 billion, which could rise to R2.7 billion.

For the financial year ended 31 March 2024 (FY24), NMSIS increased its in-force policies by 19% to 3.3 million.

Life products were introduced three years ago and have experienced substantial growth, accounting for 30% of in-force policies.

NMSIS’s profit after tax in FY24 increased by 51% to R296 million, while its net asset value was R277 million.

Sanlam, South Africa’s largest insurer, believes that the transaction, through its Fintech cluster, will allow it to advance its technology strategy to expand access to financial services across Africa.

“MultiChoice’s extensive subscriber base offers Sanlam and its affiliates a unique platform and attractive opportunity for cross-selling and cost-effective marketing to an actively engaged subscriber base.”

MultiChoice, on the other hand, gains access to insurance expertise, comprehensive financial services resources and Sanlam’s financial services operations across Africa to address its customer’s needs

MultiChoice will still retain a 40% interest in NMSIS and a 40% interest in the broader commercial venture with Sanlam, allowing it to benefit from the segment’s high-growth potential.

In terms of the sale, MultiChoice will receive an upfront payment of R1.2 billion for the 60% stake.

There is also a potential earn-out payment of up to R1.5 billion for MultiChoice’s 60% interest sold to Sanlam Life, contingent upon the total gross written premium generated by NMSIS for the year ending 31 December 2026.

NMSIS will also declare a pre-acquisition dividend of R59 million for assets held in excess of the minimum solvency capital requirement as of FY24.

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