Sanlam Life Insurance, a part of the South African Sanlam financial services group, is acquiring the Absa Consultants and Actuaries arm of Barclays Africa Group’s Absa Financial Services Ltd, it has been announced.
Sanlam is paying R285m (£16.1m, US$24.1m) for the business.
Although Barclays Plc, the UK-based banking group, still owns a minority stake (around 16%) in Barclays Africa, an Absa spokesperson said the Absa Consultants and Actuaries (ACA) sale “is not related…in any way” to Barclays chief executive Jes Staley’s stated strategy of aiming to streamline Barclay’s business in order to focus its activities on its two core markets, the UK and the US.
ACA describes itself as having a “substantial book of standalone investment funds”, with a portfolio that includes 119 retirement funds and 339,614 member clients, totalling R84bn (£4.7bn, US$6.2bn) in assets under management.
‘Providing scale where growth is limited’
Sanlam Employee Benefits chief executive Dawie de Villiers said the deal would provide scale in a market where opportunities for growth are limited.
This leap-frog element of the deal, offering scale where organic growth would prove elusive, seems to have been the driving motivation for Sanlam’s acquistion.
De Villiers told the South African newspaper The Independent that scale is “fundamentally important” in the employee benefits industry to ensure a “sustainable business model”.
He added that the deal, when finalised, will position Sanlam very well to “further expand our product offering and service levels to clients and intermediaries”.
The deal should be signed by the end of the year, following regulatory approval.
Barclays stake in Barclays Africa down to 16%
Barclays slashed its in the Johannesburg-listed subsidiary Barclays Africa from 50% to 16% with the deal in June, which meant that Barclays had reached its goal of owning less than 20% of the African business and “de-consolidating” the subsidiary from its accounts.
At that time, Staley said that the sale represented “a key milestone” in the execution of Barclays’ restructuring strategy.