Sanlam, Africa’s leading insurer, partially owned by South African billionaire Patrice Motsepe, has announced plans to acquire a controlling stake in the Shriram Group’s insurance business in India, signaling a significant move to bolster its footprint beyond the African continent. The acquisition, disclosed in a recent SENS announcement on Friday, underscores Sanlam’s commitment to expanding its operations beyond the African continent.
The transaction, scheduled to be finalized in the second quarter of this year, is subject to regulatory approvals. It will see Sanlam increasing its ownership in both Shriram General Insurance Co (SGIC) and Shriram Life Insurance Co (SLIC). Sanlam’s interest in SGIC is set to rise from the current 40 percent to 51 percent, and in SLIC from 42 percent to 54 percent.
Founded in 1918, Sanlam is a leading player in the global insurance market, with a market capitalization of R143 billion ($7.6 billion) on the Johannesburg Stock Exchange. Africa’s first Black billionaire Patrice Motsepe holds a 7.8-percent stake in Sanlam through his investment vehicle, Ubuntu-Botho Investments, and serves as the deputy chairman.
Sanlam Eyes Profit Growth in India
Sanlam Group CEO Paul Hanratty highlighted the longstanding partnership between Sanlam and the Chennai-based Shriram Group since 2005. He emphasized that Sanlam has gained extensive insights into the Indian insurance market and the portfolio of businesses under the Shriram Group during this period, underscoring the strategic rationale behind the acquisition.
This strategic move aligns with Sanlam’s ambition to capitalize on India’s robust economy for short-term profit growth. With the Indian insurance sector experiencing strong growth dynamics and relatively low penetration, Sanlam aims to triple its profit share from India within the next decade. Sanlam’s commitment to the local market is further seen in its recent bid to acquire all shares in Pretoria’s Assupol Holdings Limited.
Focus shifts to insurance stakes
To facilitate the acquisition, Sanlam has reshuffled its capital allocations, diverting funds from Shriram Finance Limited’s credit business to bolster its stakes in SGIC and SLIC. This realignment will see a slight reduction in Sanlam’s exposure to Shriram Finance Limited, from 10.2 percent to 9.5 percent.
Through this transaction, Sanlam aims to strengthen its position in India’s insurance market, leveraging the growth opportunities presented by the country’s evolving regulatory landscape, digitization efforts, and increasing customer awareness. SGIC offers a diverse range of insurance products, including motor, travel, and home insurance.
