Sanlam flexes its checkbook with a new acquisition

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Sanlam Life Insurance currently owns 28.7% of ACT Healthcare Assets, which in turn owns AfroCentric’s business, including Medscheme and AfroCentric’s pharmaceutical business – Pharmacy Direct, drug wholesaler Curasana and Activo Health.

Activo Health made headlines earlier this year when the Government Employees Medical Scheme (Gems) was investigated by the Council for Medical Schemes (CMS) for awarding a R600 million contract to Activo Health to provide vitamins to adult beneficiaries. Gems had outsourced the award of the contract to its administrator, Medscheme. CMS has not issued any updates since the initial notification that the contract award was under investigation.

The AfroCentric transaction will see Sanlam transfer its stake in ACT Healthcare Assets to AfroCentric in exchange for a 28.7% majority stake in AfroCentric. Sanlam has offered a purchase consideration of R6 per AfroCentric share, and AfroCentric shareholders have the option of receiving the purchase consideration in cash or Sanlam shares.

Sanlam Group CEO Paul Hanratty said Afrocentric would be an “exciting addition to Sanlam’s stable offering”, being a diverse and integrated healthcare provider that provides services to 3.8 million members. The agreement is subject to the approval of the Competition Tribunal and the Takeover Regulatory Committee.

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In May this year, Sanlam entered into a joint venture with Allianz to form the largest pan-African non-banking financial services entity on the continent, with a combined total group equity value of over R33 billion. At the time, Hanratty said the joint venture would strengthen Sanlam’s leadership position in key markets for its African strategy, “building quality and scale where it matters.”

During the year to June this year, Sanlam also completed the acquisition of Alexforbes’ life insurance portfolio.

All signs point to further growth, with Sanlam’s discretionary capital having grown from R2.9 billion at the end of 2021 to R6.6 billion at the end of June this year.

When the results for the six months ending June were released, Hanratty alluded to this, saying “the group will continue to invest heavily as it is positive about its outlook…Some of the acquisitions aimed at creating a scale will take several years to fully produce effectiveness, but management is giving them due attention.”

Shares of Sanlam closed down 3.17% at R48.63, having fallen 30.53% in the past six months and 11.66% in the past month. BM/DM

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