Sanlam buys 49% stake in Nico subsidiaries

Sanlam Emerging Markets (Proprietary) Limited, a South African-based life insurer, is expected to acquire 49 percent stake in each of Nico Holdings Limited’s general insurance businesses in Malawi, Zambia, Uganda and Tanzania.

The Malawi Stock Exchange (MSE)-listed financial services group said in a notice that the proposed sale of the stakes, an undisclosed amount, is expected to undergo shareholders’ approval in an extraordinary general meeting (EGM) in Blantyre on November 4 2013.

Sanlam, which has interests in India, Malaysia and 10 African countries, already owns 49 percent of Nico Life Insurance, which it acquired two years ago.

Sanlam said last month it had a R3.2 billion (K131.2 billion) chest for acquisitions in Malaysia or Indonesia and expansion in Africa.

In a published notice to shareholders, Nico Holdings Limited said the EGM is for the purpose of considering and, if thought fit, passing, with or without modifications, the sale of stakes to Sanlam.

Last week the group which has interests in life insurance, general insurance and banking, said it is close to clinching a deal for one of its subsidiary and has indicated that “definitive transactional agreements are still being negotiated.”

The group has since 2010 been involved in negotiations with a strategic equity partner for its wholly-owned general insurance business.

In August 2012, the group announced that it has found a partner and accepted the offer.

But in a cautionary statement last week, company secretary Emily Makuta said: “The transaction is expected to be completed once all conditions precedent are fulfilled.”

She advised the public and shareholders to continue to exercise caution when dealing with Nico Holdings shares, currently trading at K15.15 per share, until a full announcement is made.

Nico Holdings managing director Felix Mlusu has not spoken on the deal probably because he does not want to preempt the EGM.

But in an earlier interview, he offered an explanation on why the group, that has spread its tentacles regionally, is keen on partnering with strategic equity partners.

“Our businesses have matured and the need to have strategic partners is to enable us to take those businesses to another level. Through these strategic partnerships, we believe we can leverage the synergies which these smart partnerships create,” said Mlusu.

In 2011, the group concluded a deal with International Finance Corporation (IFC), the private sector financing arm of the World Bank Group, which acquired 16.51 percent stake in MSE-listed NBS Bank and invested $10 million.

The year before, the group also concluded deals on two of its subsidiaries Nico Life Insurance Company Limited and Nico Technologies Limited.

Sanlam Development Market (SDM), a subsidiary of Sanlam Life, bought 49 percent stake in Nico Life Insurance Company while Nihilent Technologies of India bought a 25.1 percent stake in Nico Technologies with an option to acquire a further 25.9 percent stake in the company.

Apart from the countries where the stakes are expected to be bought, the group also has subsidiaries in Mozambique trading as Nico Mozambique Vida Companhia De Seguros and in early 2010 also acquired a 49 percent stake in Standard Fire Group (SFG) Holdings [Private] Limited, a general insurance firm in Zimbabwe at $1.3 million.

Nico Holdings was the first company to list on the MSE in 1996 and its shares traded at K15.15 each on Monday.