Sanlam and Absa have joined forces to create one of the largest asset management businesses in the country. The two financial giants said they have agreed to combine their investment management businesses and create a company with assets under management, administration, and advice more than R1 trillion. The companies said Absa will exchange its investment management business, Absa Investments, for a stake of up to 17.5% in the asset management company that Sanlam created with Patrice Motsepe’s African Rainbow Capital (ARC) called Sanlam Investment Holdings Proprietary Limited (SIH). SIH is a third-party asset management business in which ARC Financial Services holds a 25% stake. Sanlam owns the remaining 75%. The transaction has been rumored for a while, but the companies kept tight-lipped about it for months.
Absa Investments comprises Absa Asset Management, Absa Alternative Asset Management, Absa Fund Managers and Absa Multi Management. As part of the transaction, Sanlam-owned Satrix, which is now a subsidiary of SIH, will acquire the exchange traded funds (ETF) business of Absa’s NewFunds. The intention is that Absa will enter into agreements to dispose of its market Linked Investment Services Provider (LISP) business to Glacier by Sanlam. Absa will also enter into a 10-year distribution agreement with SIH, meaning that the two companies will use sales channels of both Sanlam and Absa. The Absa transaction follows another alliance that Sanlam recently enter into with MTN to build Africa-wide digital insurance business.