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Patrice Motsepe, CEO of African Rainbow Minnerals and African Rainbow Capital. Photo: Elvira Wood
Patrice Motsepe and Sanlam are ready to seal another deal that will see the creation of a new business. The continent’s largest insurer announced on Friday that it intends to acquire a 25% non-controlling minority stake in African Rainbow Capital Financial Services (ARC FS), which will subsequently create a new subsidiary, ARC Financial Services Sub Co.
Just four months ago, Sanlam and ARC FS Sanlam signed another agreement to establish one of the largest black-enabled asset management companies in South Africa. That deal was the unrealized portion of the 2018 broad-based black economic empowerment transactions that also saw the two companies establish a black-owned insurance company, African Rainbow Life.
Creation of a new subsidiary company
ARC FS is a subsidiary of Patrice Motsepe’s investment holding African Rainbow Capital, which owns companies such as TymeBank, the mobile operator Rain, and has significant stakes in companies such as Alexander Forbes and Sanlam.
Sanlam said that once its agreement with ARC FS, which is subject to certain conditions precedent, gets the required go-ahead, ARC FS will transfer all of its financial services assets to the new subsidiary, ARC Financial Services Sub Co. These include the shares of the investing company. at Alexander Forbes, Afrocentric Medical Scheme Manager, Rand Mutual Holdings, A2X, and African Rainbow Life, among others.
But ARC’s banking investments, which include TymeBank, the Artificial Smart Fund and the mortgage originator, Ooba, will not be transferred to the new subsidiary.
Sanlam Chief Executive Paul Hanratty said this is because the insurer wants to avoid owning bank assets.
“Sanlam is very focused on insurance and financial services related to asset management. We have no appetite for the type of bank assets,” he said, before adding that the insurer’s relationship with Capitec is so willing to get involved. in banking.
Capitec sells the bank brand funeral products that are underwritten by Sanlam. The partnership has proven lucrative for both parties, thanks to Capitec’s broad footprint reaching corners of the low-income segment that Sanlam’s funeral products division, Sanlam Sky, cannot.
Capitec said that before the closing, it was issuing 100,000 funeral policies per month on average, a sales rate that continued as soon as SA entered level 2 of the closing. Since the association’s inception, Capitec has sold more than 2 million policies.
