SANLAM LIMITED - Sanlam Ltd/Santam Ltd - Acquisition of an effective 30% interest in Saham Finances S.A

Sanlam Ltd/Santam Ltd - Acquisition of an effective 30% interest in Saham Finances S.A

Sanlam Limited                                         Santam Limited
(Incorporated in the Republic of South Africa)         (Incorporated in the Republic of South Africa)
Registration number 1959/001562/06                     Registration number: 1918/001680/06
JSE share code: SLM                                    JSE share code: SNT
NSX share code: SLA                                    NSX share code: SNM
ISIN: ZAE000070660                                     ISIN: ZAE000093779
(“Sanlam”)                                             ("Santam")


ACQUISITION OF AN EFFECTIVE 30% INTEREST IN SAHAM FINANCES S.A. (“Saham Finances”)

1. INTRODUCTION

   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”).


2. 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:

   2.1.        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.

   2.2.        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.

   2.3.        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.

   2.4.        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.
  


3. 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.

4. 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.

  4.1. SEM
       SEM will be appropriately capitalised by Sanlam from its available discretionary capital.

  4.2 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.


5. 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.

6. 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.


7. 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.

8. 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.

9. 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.


10. CONFERENCE CALL

  A joint Sanlam and Santam conference call for analysts, investors and the media will take place at 16h00
  (South African time) today. Investors and media who wish to participate in the conference call should dial
  the numbers indicated below.

  Audio dial-in facility

  A toll free dial-in facility will be available. We kindly advise callers to dial in 5 to 10 minutes before the
  conference call starts at 16h00.
  
Access numbers for participants dialing live from their country:
                                 
      South Africa               Toll        021 819 0900
                                 Toll-free   0800 200 648

      USA and Canada             Toll-free   1 855 481 5362

      UK                         Toll-free   0 808 162 4061
                                             

      Other Countries            Toll        +27 11 535 3600
                                             +27 10 201 6800


  Recorded playback will be available for three days after the conference call.


  Access Numbers for Recorded Playback:
 
 Access code for recorded playback: 43057
     South Africa               Toll         011 305 2030
     USA and Canada             Toll-free    1 855 481 5363
     UK                         Toll-free    0 808 234 6771
     Other Countries            Toll         +27 11 305 2030




Bellville
24 November 2015

Sponsor to Sanlam                                        Sponsor to Santam
Deutsche Securities (SA) Proprietary Limited             Investec Bank Limited

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