Absa intends to sell its LISP business to Glacier by Sanlam as part of the overall transaction in which Sanlam Investment Holdings (SIH) will acquire Absa’s investment management business.
In a SENS announcement, Sanlam said the conclusion of agreements to give effect to the LISP transaction was a suspensive condition to the investment management transaction.
Absa’s LISP business had R66 billion in assets under administration on 30 June 2021. Sanlam said it expected Glacier to have assets under administration of about R350bn when the LISP deal was concluded, making it one of the leading LISP businesses in South Africa.
The SIH-Absa Investments transaction will see Absa Financial Services (AFS) exchange Absa Investments for a shareholding of up to 17.5% in SIH, Sanlam said.
On 30 June, SIH and Absa Investments had assets under management, administration and advice of R879bn and R238bn, respectively, according to the announcement. Once the transaction has been concluded, SIH will have assets under management, administration and advice in excess of R1 trillion.
The combination of SIH with Absa Investments will further strengthen SIH’s position as one of South Africa’s largest black-owned asset managers, according to Sanlam.
Sanlam said the effective date of the transaction would depend on the fulfilment of certain suspensive conditions, including regulatory approvals, and was expected to occur in the first half of 2022.
SIH will acquire the following Absa businesses:
- Absa Asset Management (ABAM);
- Absa Alternative Asset Management;
- Absa Fund Managers, excluding the Absa Prudential Money Market Fund;
- Absa Multi Management; and
- Absa’s NewFunds (RF), excluding the commodity ETF business.
AFS, together with other Absa subsidiaries, and SIH have also entered into a distribution agreement in terms of which SIH will be the preferred provider of investment products for distribution through certain Absa distribution channels
The initial term of the distribution agreement and the LISP relationship agreement will be 10 years, with a review on the third anniversary to allow for adjustments to enhance the agreements. “Each of these agreements will be renewable by agreement after the initial 10-year term.”
ABAM has been appointed as the asset manager of the Absa Prudential Money Market Fund. The value of ABAM for purposes of the investment management transaction does not include the value of this contract.
“The value of this contract and the further consideration to be paid to AFS for it as part of the investment management transaction will be determined 12 months after the effective date of the investment management transaction with reference to the value of the contract at that date.”
SIH is Sanlam’s third-party asset management business in which ARC Financial Services is a shareholder. ARCFS has a 25% effective interest in SIH through its 25% shareholding in SIH’s holding company, with Sanlam owning the remaining 75%.
Sanlam said that clients of the combined SIH business will benefit from access to a wider range of investment solutions to meet their financial needs. “Increased investment in research and technology will equip SIH with the data and systems to strengthen its industry leadership.”