In 2021, Sanlam acquired a 25% non-controlling minority stake in ARC FSI. Credit: T. Schneider/Shutterstock.

South African insurance major Sanlam has entered definitive agreements for Sanlam Life Insurance to acquire a 25% stake in African Rainbow Capital Financial Services Holdings (ARC FSH). 

The transaction, valued at R3.9bn, involves a mix of cash and stock, with Sanlam Life subscribing for ordinary shares in ARC FSH for R2.41bn in cash and a share swap valued at R1.49bn. 

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ARC FSH, an investment holding company for the financial services investments of the Ubuntu-Botho Investments group, will, post-transaction, own 100% of ARC Financial Services Investments (ARC FSI), along with its existing investments in Tyme Bank, AI Fund, CrossFin and Ooba.  

Currently, ARC FSH is 50.1% owned by African Rainbow Capital (ARC) and 49.9% by the ARC Fund.  

The acquisition by Sanlam Life is part of a broader partnership with Ubuntu-Botho Investments (UBI) aimed at fostering competition and promoting financial inclusion within South Africa’s financial services sector. 

In 2021, Sanlam acquired a 25% non-controlling minority stake in ARC FSI, which is said to have bolstered its market presence and supported its financial inclusion goals.  

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Sanlam added: “The proposed transaction is a natural extension of Sanlam’s existing interest in ARC FSI. Sanlam will continue to explore ways to collaborate strategically with ARC FSH and its portfolio investments to enhance competition and to assist Sanlam in providing holistic and integrated product offerings to its clients.” 

This move comes as Sanlam’s subsidiary, Santam, looks to Asia for diversification and growth, seeking to counteract the slow expansion in its domestic market.  

The acquisition is expected to further strengthen Sanlam’s position in the market and align with its strategic objectives. 

This June, Sanlam agreed to buy a 60% stake in NMS Insurance Services, MultiChoice’s insurance division.