Financial services group and life assurer Sanlam and Thebe Investment Corporation, the oldest black economic empowerment company in South Africa, announced on Thursday that they have entered into an agreement for Sanlam to become a strategic partner in Thebe’s financial-services proposition.
In terms of the transaction, Sanlam Life will acquire 55% of Safrican, Thebe’s life-assurance company focusing on life, funeral and credit life insurance. Part of Safrican’s distribution activities will be hived off in a new entity called Thebe Community Financial Services (TCFS), which will be used to expand the Thebe group’s financial-services offering to its target markets.
TCFS will be 70% owned by Thebe and 30% by Sanlam Independent Financial Services — a Sanlam cluster that invests in independent, customer-facing entities and intermediary businesses in the financial-services industry.
Vusi Khanyile, chairperson of Thebe, said: “Combining Thebe and Sanlam’s resources in this market segment will provide the people, infrastructure and capital required to take financial-services products to our communities in a cost-effective manner.
“The relationship is a reflection of a shared vision and our common view of this segment of the market. The injection of funding enables Thebe to explore new opportunities in the distribution of financial-services products, to streamline our operations and to leverage Sanlam’s product portfolio to our advantage.”
Johan van Zyl, CEO of Sanlam, said: “Our alliance with Thebe is another step in Sanlam’s strategy of having multiple client-facing units or brands in the entry-level market and to complement organic growth through strategic acquisitions.
“Earlier in the year, this was also evident from the creation of Break-Thru Financial Services with Fawu [the Food and Allied Workers’ Union]. As targets are achieved, both these transactions will enhance Sanlam’s distribution reach and will provide an attractive return on capital invested as well as improving business volumes.”
Several of Thebe’s successful businesses will be housed in TCFS. This will include Creditworx, a credit risk solution company, with more than 102 branches throughout the country and an extensive corporate client base with access to a large number of walk-in customers.
It will also include Thebe Employee Benefits, an employee-benefits consulting and administration entity; Thebe Transactiv, a data and money-movement entity; and Thebe YoMnotho, offering tax-reconciliation services.
Safrican is one of the oldest, most established brands in the entry-level market segment, with more than R240-million annual premiums, almost two million insured members and 600 brokers.
Safrican also has a distribution agreement with the South African Post Bank until the end of 2006, giving Sanlam and Thebe further access to almost 3 000 branches.
Sanlam and Safrican will be the exclusive long-term insurance product providers in TCFS. The aim is to expand TCFS to distribute financial-services products aggressively through establishing financial-services outlets and through its Post Office agreement.
Both organisations will be able to capture a broad part of the market, as it will combine Safrican’s experience and distribution capabilities in the entry-level market and Sanlam’s experience and product portfolio in other markets,” said Van Zyl.
Vusi Khanyile from Thebe concluded that Thebe’s shareholders, including Batho Batho Trust, are very positive about the Sanlam partnership.
“There are tremendous synergistic opportunities for both ourselves and Sanlam, which can now be unlocked. As such, we view these developments as a win-win scenario for everyone involved.”
The transaction is subject to certain regulatory approvals. — I-Net Bridge