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Acquisition of an Effective 30% Interest in Saham Finances S.A. ("Saham Finances")

The boards of directors of Sanlam and Santam are pleased to announce the conclusion of agreements, whereby Sanlam’s wholly owned subsidiary, Sanlam Emerging Markets Proprietary Limited (“SEM”), and Santam will jointly acquire an effective 30% interest in Saham Finances, the insurance arm of the Saham Group, from The Abraaj Group (“Abraaj”), the International Finance Corporation, a member of the World Bank Group, (“IFC”), and the IFC African Latin American and Caribbean Fund which is managed by IFC Asset Management Company (“IFC ALAC Fund”), through a special purpose vehicle (“Acquisition SPV”) held jointly by SEM as to 75% and Santam as to 25%, for a total cash consideration of US$ 375 million (“Purchase Consideration”) (the “Transaction”).

Overview of Saham Finances

Saham Finances is an insurance group with operations in 26 countries across North, West and East Africa, and the Middle East. It is the largest insurer in Africa excluding South Africa. It writes mainly (exceeding 80%) non-life business through its 49 subsidiaries, and has a network of 650 branches with a staff complement of more than 3,000 people. Saham Finances also has a leading market share in many of its markets.

The principal insurance businesses of Saham Finances in the various regions include:

  • Morocco
    • Saham Assurance Maroc, the leading property and casualty insurer, is 51.8% owned by Saham Finances. Saham Assurance has been listed on the Casablanca Stock Exchange since 2010.
    • Saham Assistance is the leading provider of roadside and travel assistance in Morocco and West Africa and is 67% owned by Saham Finances and 25% owned by Saham Assurance Maroc.
  • Sub-Saharan Africa
    • Colina Participations is the holding company of the Saham Finances subsidiaries in West and Central Africa, and is based in Cote d’Ivoire. It is the leading insurance group in Africa’s Francophone region, with 28 life and non-life subsidiaries operating across 14 countries including the Cote d’Ivoire, Gabon, Cameroon and Mali. Colina Participations is a wholly owned subsidiary of Saham Finances.
  • Lebanon
    • LIA Insurance is a composite insurance company with a strong presence in motor and life insurance. 81% of the share capital of LIA Insurance is held by Saham Finances.
  • Angola
    • GA Angola Seguros S.A. is a non-life insurer in Angola. It is the third largest player in the Angolan insurance market with an 18% share of a rapidly growing market. Colina Participations holds a 49.9% shareholding in GA Angola Seguros S.A.

Rationale for the Transaction

The Transaction provides the Sanlam Group (which includes Santam) with the opportunity of a single entry point to expand in both North and West Africa.

The markets in both North and West Africa represent an attractive strategic opportunity for the Sanlam Group as it:

  • Enhances the Sanlam Group’s African franchise with strong franchises in Francophone, Anglophone and Lusophone Africa.
  • Provides the Sanlam Group with access to untapped insurance growth markets in both North and West Africa. These markets are both characterised by fast growing economies and underpenetrated insurance markets.
  • Provides opportunities for the expansion of the Sanlam Group’s current Pan-African bancassurance relationships into new African territories.
  • Provides the Sanlam Group with a well-diversified portfolio which is largely complementary to its existing geographical footprint, thereby expanding the Pan-African exposure of the Sanlam Group.

The Sanlam Group, Saham Finances and the Saham Group shall also continue to explore future co-operation opportunities to strengthen the strategic and operational relationship going forward.

Purchase Consideration

The Purchase Consideration for the assets to be acquired by the Acquisition SPV will be apportioned on the basis of 75% payable by SEM and 25% payable by Santam. Each of SEM and Santam will fund their proportionate share of the Purchase Consideration from available internal capital resources.

  • SEM
    • SEM will be appropriately capitalised by Sanlam from its available discretionary capital.
  • Santam
    • Santam will fund its proportionate share of the purchase consideration of US$ 93.76 million from the net proceeds on disposal of a portion of its listed equity portfolio, and from existing foreign cash resources.

Conditions Precedent to the Transaction

The conclusion and implementation of the Transaction will remain subject to the completion of conditions precedent which are, inter alia, the receipt of all necessary regulatory approvals, and the concurrent acquisition by the Saham Group of the remaining 7.5% interest in Saham Finances held by the IFC, IFC ALAC Fund and Abraaj.

Other Key Terms

In terms of the shareholders agreement to be concluded between the Acquisition SPV, Sanlam and the Saham Group, Sanlam and Santam will (jointly) have representation on the board of Saham Finances and certain key subsidiaries and certain minority protections.

Sanlam has also undertaken to procure that the Acquisition SPV will comply with its obligations under the relevant transaction agreements.

Financial Effects of the Transaction

As per the latest audited financial statements for the year ended 31 December 2014, the consolidated net asset value of Saham Finances on 31 December 2014 was US$ 459 million and the net profit after tax and minority interests for the period was US$ 52 million.

Post the implementation of the Transaction, the Acquisition SPV will participate in 30% of the earnings and net asset value of Saham Finances.

Sanlam and Santam will account for their respective effective interests in Saham Finances as investments in associated companies in their consolidated financial statements.

Effective Date

The effective date of the Transaction will be dependent on the fulfilment of the conditions precedent and is expected to occur during the first quarter of 2016.

JSE Limited Listings Requirements

For Santam, the Transaction has been categorised as a Category 2 transaction in terms of the Listings Requirements of the JSE Limited.

For Sanlam, the Transaction is below the Category 2 threshold and this announcement is made on a voluntary basis.

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