This is how the largest acquisition of all time in the African insurance industry has taken place.
The takeover of Saham Finance, Saham Group’s insurance division, was predictable. For two years, the South African group had managed to rise to a level of 47% of capital, following a two-stage acquisition. As a result, it was expected that there would be a move beyond 50% but not a total takeover.
On March 7, Sanlam took everyone by surprise by announcing that it has acquired an additional 53%, ie 100% of this Insurance division, which extends in 26 countries, generates a turnover of $ 1.2 billion, or 65% of that of Saham Group. It must be said, the case has taken all the top management short.
Nadia Fettah, the general manager of Saham Finance, who was unaware of the story, was informed at 6 days of the operation. Convened in Rabat by Moulay Mhamed Elalamy, director of the group’s Morocco division and Moulay Hafid Elalamy, founder of Saham, kept away from business by his role as Minister of Industry, Investment, Trade and Economy Numeric cumulated with that of president of the Moroccan candidature to the organization of the World Cup 2026, that which embodies theoretically the image of the group falls of the clouds when it is informed by the father. “We give everything, including Morocco.”
Brutal information is failing to overturn the former CNI-Saada framework, challenged by the performance of sub-Saharan affiliates that are lagging far behind (82% of targets) compared to the strategic plan. Nadia Fettah can be considered happy. The deputy general manager of Saham Finance, Emmanuel Brûlé, will be informed of the operation of the century only the day before. The bulk of the management discovers the information at the same time with the official communiqué sent in the early morning of the day.
The shock is immense among executives, men and women, who made the rain and the good weather since Moulay Hafid Elalamy, too taken by his ministerial functions, left the rudder to a pallet of decision-makers of which many, with the notable exception of Raymond Farhat, do not know anything about Africa. Negotiations lasted more than a year between the South Africans and the Moroccan owners, defended by Mr. Farhat, one of the “survivors” of the network Colina, who has sat on the board of Sanlam for two years. Talks have long stumbled on the price, with South Africans wanting a substantial discount on the stock price.
It is certainly in order to embellish the bride that the same Raymond Farhat has worn the dagger on the group Sunu, the first life insurer in the area CIMA, owned 21%. In the end, both parties fall on a price well below the daily rate. While the staff was in shock and rumors of service was already raging in the headquarters of the group, located Boulevard Zerktouni in Casablanca, a dapper Raymond Farhat, appeared in front of the media, for a first press conference under the snapshot of the photographers.
Explaining the operation, the Lebanese is trivial: “Saham wanted to turn into an investment fund, that’s why, he gives his insurance pole.” The ad does not convince anyone. Analysts and journalists present on the realized value, close to 2 billion dollars. The emissary of Moulaye Hafid Elalamy will insist that the added value achieved in the operation is “zero”. Elalamy’s son, Moulay Mhamed Elalamy, who was five years old when his father was laying Saham’s bases, flies to his rescue: “Over more than 20 years of existence, the Saham Group has never paid dividends in its history. All of Saham’s products have always been reinvested.
Starting from this logic, I can tell you that the added value will be “0” because all the money will be reinvested “. This is not necessarily what the market thinks. Just as he had acquired Colina by relying on the Moroccan fund of insurance solidarity and the assistance of development institutions (SFI) and funds like Wendel, Moulaye Hafid Elalamy, as a good trader, has always used the market for to make acquisitions.
The pan-African investment fund he intends to launch now seems to have prey all found. The beginnings of an alliance between the new fund, which “hopes to raise money both nationally and internationally”, in the words of Moulaye Hafid Elalamy, and BMCE Bank Of Africa, a research institution of a succession, occupy the conservations of the initiated. “The Saham fund could probably enter BMCE Bank Of Africa and not in Finance.Com, for reasons of the non-competition clause signed with Sanlam,” reports an analyst.
BMCE Bank Of Africa under the Saham label
Indeed, the holding Finance.Com includes both BMCE Bank Of Africa but also RMA Wataniya, Morocco’s second largest player in insurance. By positioning itself at this level, MHE (Moulaye Hafid Elalamy) will come in front competition with Sanlam. “By going a step underneath, on the BMCE Bank Of Africa network, he settles a problem of succession and durability while achieving his dream of youth, to own a bank,” says the same analyst who believes that both entities are in talks. Sanlam inherits the partnership between Saham and Crédit du Maroc. All is well that ends well as the other says.
At the announcement of the deal Sanlam-Saham, March 7, the BMCE Bank, listed on the Casablanca Stock Exchange, jumped, garnering more than 6% on March 8. The two groups have signed a strategic partnership agreement since 2015. Earlier this year, Othman Benjelloun announced a capital increase reserved for Moroccan institutional investors. Speculations see the Saham fund take 25% of this capital. As an investment fund, could Saham go beyond? Will he opt for a diversification operation, also prospecting for Ecobank, the leading African banking network (in terms of the number of countries covered).
A possible merger BMCE Bank Of Africa and Ecobank would bring synergies, says one. This is not a point of view when we know that Sanlam, insured to take shares in the pan-African fund of Saham, is held 12% by PIC (Public Investment Corporation), the South African pension fund, the one of Ecobank’s largest shareholders alongside South African bank Nebank.
In the meantime, BOA’s banking network is evolving in a strategy that is not unlike the embellishment of the bride. “The BOA (Bank of Africa) group network expanded in 2017 with the obtaining of a banking license in Cameroon. “We are also negotiating the opening of new banks in Southern Africa and by the end of 2018 we should be planting our flag in five new countries, including South Africa and Zimbabwe,” the Bank’s CEO said in an interview with the media24 site. com.
A redemption in three phases
According to Ian Kirk, the Sanlam takeover of Saham was done in three phases. The first one dates back to 2016 when Sanlam, through its subsidiary Sanlam Emerging Markets Ireland (operating in the field of international insurance) acquires a 30% stake in Saham Finances, thanks to the exit of the Financial Corporation (IFC) and Abraaj of Saham capital.
The second phase takes place in May 2017 when the South African giant acquires 16.67% of the capital of the subsidiary of the Moroccan holding thus increasing its stake to 46.67%. On 7 March, the South African group then bought out the rest of the company’s shares, 53% after several months of negotiations. Overall, Saham garnered about $ 1.7 billion to $ 2 billion in what is the largest acquisition in the African insurance sector.
framed
Biggest transaction in insurance sector gives Sanlam years ahead of rivals
For $ 1.05 billion. The operation, equivalent to about 12.5 billion rand, is the largest insurance transaction on the continent and the second largest in financial services, after the acquisition of African businesses Barclays PLC for 18.3 billion of rand in 2012.
At a price / earnings (P / E) ratio above 20x, Sanlam pays a premium for SAHAM. According to Adrian Cloete, portfolio manager at PSG Wealth, the premium is justified given the quality of the activity and its exposure across the continent. “It gives them years ahead of other competitors in Africa.” Ian Krik, CEO of Sanlam, said, “We work in a very competitive environment … We can not go to hell to build this. unique positioning because competitors will look at what we are doing, come to understand it and try to imitate it. We have a very short time to occupy this [leading] position. “
