Sanlam sells Sh730m stake in asset manager

South African insurance firm Sanlam Group has sold part of its stake in Nairobi-based asset manager Sanlam Investments East Africa (SIEA), formerly PineBridge, for Sh730 million.

The move comes after the multinational acquired a controlling 75 percent equity in the investment firm in 2017 for an undisclosed sum.

Sanlam did not specify the stake it has sold but the transaction, implemented through its subsidiary Sanlam Emerging Markets (SEM) is expected to have significantly reduced its interest in the asset manager.

“SEM sold a stake in the Kenyan-based Sanlam Investments East Africa asset management business to its local partner, realising R101 (Sh730 million),” the multinational disclosed in its latest annual report.

Sanlam added that the transaction is part of its strategy to deepen relationships with local partners with an aim of benefitting from their expertise and contacts in the various markets.

The identity of the minority investor in SIEA was not immediately clear.

“Our general preference in emerging markets outside of South Africa is to have local partners as equity investors in our businesses,” Sanlam said.

“These partners provide us with distribution capability, an understanding of the local market conditions and culture and in many instances existing relationships with regulators, independent brokers and institutional clients.”

Sanlam added that it sees its role as a technical partner, bringing a wealth of experience in product development, financial and actuarial support, risk management and sound governance.

The multinational acquired SIEA to boost its asset management business which generates fees paid by institutional investors and high-net-worth individuals seeking specialist investment expertise.

Assets under management (AUM) at SIEAL stood at Sh204 billion in June last year.

Sanlam earlier announced that asset management units run by its regional insurance subsidiaries would be merged with SIEAL to create an outfit operating on a larger scale.

Players in the asset management business say increased competition has driven down fees, leaving companies with larger assets relatively better off. Firms in the industry earn their fees by taking a fraction of assets and/or part of the profits generated beyond a set return threshold.

More players have been attracted to the asset management business seeking fees from wealthy investors whose ranks continue to grow in line with economic expansion.