Sanlam has reached an agreement with South African financial services provider Absa to combine their investment management divisions in the country.
Absa will exchange its arm for a stake of up to 17.5% in Sanlam Investment Holdings Proprietary.
Absa Investments is made up of Absa Asset Management, Absa Alternative Asset Management, Absa Fund Management – excluding the Absa Prudential Money Market Fund – and Absa Multi Management.
Sanlam subsidiary Satrix will also acquire the ETF business of Absa’s NewFunds, while Absa intends to dispose of its market linked investment services provider arm, to Glacier by Sanlam.
At completion, the merged business will become an asset management company with ZAR 1trn (£48.6bn, $66bn, €57.2bn) in assets under management, administration and advice.
The two firms will enter into a 10-year agreement as well, where they will be able to use each other’s distribution networks to increase their market reach.
Sanlam group chief executive Paul Hanratty said: “We are delighted to welcome Absa clients and investment management business employees to Sanlam when the transaction becomes effective.
“Sanlam prides itself on having a leading investment business at our core to ensure that we can deliver superb returns to all our customers. We are confident that this transaction will strengthen our ability to deliver investment excellence for customers through our ability to further invest in the business.”
Jason Quinn, Absa interim group chief executive, added: “For Absa, the transaction delivers improved scale, capabilities, customer propositions and transformation, all of which we view as essential to achieving growth in the investment management sector.
“The transaction will help us create a deeper, broader range of investment solutions for our clients.
“There is an exciting complementary nature to the relationship, which we believe will realise value for all of our stakeholders. For our staff, there will be an opportunity to work for a larger world-class, multi-capability investment business.”
The transaction is dependent on the fulfilment of certain conditions including regulatory approval and the deal is expected to be finalised in the first half of 2022.