Sanlam, Africa’s largest insurer, partially owned by South African billionaire Patrice Motsepe, has unveiled its strategy to capitalize on the robust Indian economy for short-term profit growth.
Facing challenges in its home market, the insurance giant aims to triple its profit share from India within the next ten years, according to CEO Paul Hanratty.
In a recent statement, Hanratty, who is one of South Africa’s most affluent business executives, highlighted India as the key driver of Sanlam’s fast-growth strategy, saying, “If you ask where our real short-term upside is, it’s India.”
“We’ve got a great business with them, growing tremendously. That is our fast-growth outlet.” He further disclosed the enduring partnership with Shriram Capital Group, dating back to 2005, which presently contributes around 10 percent to Sanlam’s profit.
Diversification beyond Africa: Sanlam’s global aspirations amidst South Africa’s economic struggles
The strategic shift towards India to counteract domestic economic challenges comes as South Africa grapples with tepid economic growth, exacerbated by power shortages, rotational blackouts, and logistical bottlenecks.
Sanlam, dependent on South Africa for 75 percent of its revenue, is seeking avenues outside the African continent. However, Hanratty clarified that the company remains committed to its home country, stating, “Sanlam cannot thrive in the long run without a thriving South Africa.”
Emphasizing the significance of the Indian market, Hanratty explained that India’s economy is growing nearly five times faster than South Africa’s, with the World Bank forecasting a 6.4 percent growth for India this year. The partnership with Shriram Capital, operating in the insurance sector, provides Sanlam with a foothold in a country surpassing Africa in population.
Ubuntu-Botho investments: The vehicle steering Motsepe’s 7.8-percent stake in Sanlam
Founded in 1918, Sanlam holds a significant position on the Johannesburg Stock Exchange, with a market capitalization of nearly $8.2 billion.
Motsepe, South Africa’s richest Black man with a net worth of $2.5 billion, serves as the vice chairman of the insurance group, owning a 7.8 percent stake through his investment vehicle, Ubuntu-Botho Investments.
Despite the focus on India, Hanratty indicated that Sanlam continues to explore opportunities in select African markets. He identified about 10 countries on the continent crucial for Sanlam’s growth, emphasizing the need for the insurer to scale up.