Sanlam Ltd., South Africa\u2019s biggest insurer, plans to buy a 25% stake in a company backed by billionaire Patrice Motsepe that controls digital bank Tymebank.<\/p>\n\n\n\n
Sanlam\u2019s Life unit will acquire the stake in African Rainbow Capital Financial Services Holdings, which controls African Rainbow Capital Investments Ltd.\u2019s holdings in TymeBank, AI Fund, CrossFin Holdings and Ooba, in a deal valued at R3.9 billion ($218 million), according a regulatory filing. <\/p>\n\n\n\n
Motsepe is Sanlam\u2019s deputy chairman and is the founder of African Rainbow Capital Investments.<\/p>\n\n\n\n
Sanlam will pay R2.413 billion in cash and will swap its 25% shareholding in African Rainbow Capital Financial Services Investments – valued at R1.492 billion – for an equivalent value of shares in the investment holding company. <\/p>\n\n\n\n
According to its chief executive officer, Coenraad Jonker, TymeBank, which is also backed by China\u2019s Tencent Holdings Ltd., is valued at close to $1 billion.<\/p>\n\n\n\n
\u201cThe transaction adds value for shareholders as Sanlam is swapping its current investment for a higher-returning one at a reasonable price,\u201d Adrienne Damant, an analyst at Avior Capital Markets Pty Ltd. said. <\/p>\n\n\n\n
\u201cAdditionally, we believe Sanlam can leverage TymeBank\u2019s distribution network to sell insurance products to South Africa\u2019s mass market.\u201d<\/p>\n\n\n\n
Sanlam extended its slide for a second day Monday, shedding as much as 4.1%. African Rainbow Capital Investments climbed as much as 9.2% <\/p>\n\n\n\n
The 25% stake will be treated as an investment in an associate, Sanlam said. <\/p>\n\n\n\n
The proposed deal is a \u201cnatural extension\u201d of Sanlam\u2019s existing interest in African Rainbow Capital Financial Services Investments and the insurer will continue to explore ways to collaborate strategically with the holding company and its portfolio investments, according to the filing.<\/p>\n\n\n\n