Absa Group Limited, South Africa’s third-largest lender, is said to be in discussion to offload part or all of its asset-management business to Africa’s largest insurer, Sanlam Limited and African Rainbow Capital Investments Limited, the underwriter’s partner.
A deal between Absa Group and Sanlam would create one of South Africa’s largest money managers, behind South Africa’s state-owned Public Investment Corporation. Both the lender and insurer have a presence in Kenya and are listed at the Nairobi Securities Exchange(NSE)
The negotiating parties see room for further growth as the sector is otherwise populated with several small players.
Absa Group has declined to discuss the deal
Absa and Sanlam declined to comment on this matter. ARC, the investment vehicle of South African billionaire Patrice Motsepe, said it couldn’t comment on any talks with potential new partners.
These secretive discussions are taking place after Absa announced a decision to unwind its US$6 billion money-market mutual fund, citing risks to the bank due to clients’ belief its investments had the same safety as cash in a bank account.
The move fueled speculation that Absa may be looking for a buyer.
Absa Group is presently under interim CEO Jason Quinn after former head Daniel Mminele quit following a disagreement in April this year with the board over strategy.
In 2020, African Rainbow Capital acquired a 25% stake in Sanlam’s asset management arm. At the end of last year, Sanlam Investments had about 649 billion rand in assets under management.
Absa’s investment management unit oversaw 263 billion rand at the end of December 2020.