Insurance giants Allianz SE and Sanlam Limited #ticker:SLAM have signed an agreement to form a 10-year joint venture that will bring together their interests in their local subsidiaries Sanlam Kenya and Jubilee Allianz General Insurance Kenya.
Sanlam will own a 60 percent stake in the joint venture while Allianz will hold a 40 percent interest with an option to buy an additional nine percent ownership in the future.
“In line with both parties’ long-term commitment to the strategic partnership and the continent, the parties have agreed to remain invested in the joint venture for a period of at least 10 years,” Cape Town-based Sanlam said in a statement.
Allianz will contribute its ownership in its African subsidiaries including majority stakes in Jubilee general insurance businesses in Kenya, Uganda, and Burundi which it recently acquired in cash transactions.
Sanlam will contribute its interests in Sanlam Kenya (57.1 percent) and other operations. The multinational’s operations in South Africa, India, the Middle East, and Malaysia will be excluded from the deal.
It was not immediately clear whether the joint venture will move beyond asset transfers to take full ownership or merge the businesses in which the parties have controlling stakes in the various markets.
Sanlam Kenya is listed on the Nairobi Securities Exchange #ticker:NSE and has minority shareholders including billionaire investor Baloobhai Patel with a 20.7 percent stake.
Jubilee Holdings #ticker:JUB , also listed on the NSE, owns a 34 percent stake in Jubilee Allianz General Insurance Kenya. The 66 percent ownership in the general insurer held by Allianz will be contributed to the joint venture.
The proposed transactions are subject to regulatory approvals including from competition authorities in the affected markets.
The 60/40 ownership of the joint venture by Sanlam and Allianz respectively will be based on the relative appraised value of the assets they will be contributing as of June 30, 2021.
“The proposed transaction will enable Sanlam to enhance its capabilities in existing markets and expand its footprint and market-leading positions in certain key jurisdictions on the African continent,” Sanlam said.
Sanlam added that it sees several strategic benefits in the deal including working with Allianz to gain from knowledge sharing, economies of scale, a combined platform as well as potential synergies for the joint venture and the South African firm.
Source: Business Daily Africa