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Santam acquisition packaged with first major BEE deal in Risk Finance
23 March 2005
Santam Risk Finance Limited, a wholly owned subsidiary of Santam Ltd, has concluded a deal with Kagiso Treasury Services (Pty) Ltd - part owned by Kagiso Trust Investments (Pty) Ltd - to sell a third of the company to them.
As an integral part of the transaction, Santam has acquired the Nova-Group comprising of Nova Risk and Nova Life that are focused in the provision of cell captive solutions - a vehicle that allows clients to participate in the insurance business without the burden of having a licence or niche products.
Mpumi Tyikwe, Executive Head of Corporate Lines at Santam says, “This deal has created the first black empowered South African insurance companies specialising in risk finance, cell captive and affinity business.
“These are major deals for us and it’s great to be first out of blocks in this sector. The deal is an outstanding strategic fit between Santam, Nova Group and Kagiso Treasury Services. It’s an imperative of Santam to continue to seek out BEE partners to transfer skills and access markets where BEE credentials are paramount.
“There are other synergies such as shared clients and business partner relationships such as Kagiso Treasury Services’ extensive client base which represents a cross selling opportunity. Kagiso Treasury Services will also be able to expand their interests in financial services, particularly in the short term insurance market.”
On the 14th of March 2005 Santam signed an agreement to purchase the Nova Group from Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in Munich, Munich Re of Africa Ltd and Capital Alliance Ltd. This deal is significant for Santam as it will increase the company’s market share in cell captive and niche insurance solution for corporates by 100%. Santam had a 10% market share before this deal. It will also enable Santam Risk Finance to consolidate its position in the mass markets by providing cell captives for retailers that sell their products on credit.
Since its formation in 1998, the Nova Group has earned a reputation for being innovative.
“The combination of Nova’s entrepreneurial spirit and Santam’s financial stability and track record will provide clients with unparalleled service.
“We believe in this deal that we have created a platform to grow this business in a profitable and sustainable manner as it gives us critical mass.”
The transactions remain subject to regulatory approvals by the Financial Services Board and Competition Commission, but the effective date will be 31 March 2005.
A portion of the transaction price will be subject to a vendor financing arrangement and the remainder will be cash financed.
Kagiso Treasury Services will have two positions on the board of Santam Risk Finance Limited.
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