Sanlam Ltd., South Africa’s biggest insurer, plans to buy a 25% stake in a company backed by billionaire Patrice Motsepe that controls digital bank Tymebank.
Sanlam’s Life unit will acquire the stake in African Rainbow Capital Financial Services Holdings, which controls African Rainbow Capital Investments Ltd.’s holdings in TymeBank, AI Fund, CrossFin Holdings and Ooba, in a deal valued at R3.9 billion ($218 million), according a regulatory filing.
Motsepe is Sanlam’s deputy chairman and is the founder of African Rainbow Capital Investments.
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.
According to its chief executive officer, Coenraad Jonker, TymeBank, which is also backed by China’s Tencent Holdings Ltd., is valued at close to $1 billion.
“The transaction adds value for shareholders as Sanlam is swapping its current investment for a higher-returning one at a reasonable price,” Adrienne Damant, an analyst at Avior Capital Markets Pty Ltd. said.
“Additionally, we believe Sanlam can leverage TymeBank’s distribution network to sell insurance products to South Africa’s mass market.”
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%
The 25% stake will be treated as an investment in an associate, Sanlam said.
The proposed deal is a “natural extension” of Sanlam’s 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.
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