DStv-owner seals R2.6 billion deal with South Africa’s biggest insurer

MultiChoice and Sanlam announced today that their insurance deal has fulfilled all the necessary conditions and will become effective at the end of this month.

As part of the deal, Sanlam Life will acquire a 60% stake in MultiChoice’s insurance business, NMS Insurance Services.

In addition, MultiChoice will ink a long-term commercial arrangement with Sanlam to expand insurance and related financial service offerings into MultiChoice’s subscriber base in Africa.

It is a R2.7 billion deal, where Sanlam will pay R1.2 billion cash up front, with a potential performance-based cash earn-out of up to R1.5 billion.

This spells good news for MultiChoice, which is banking on the deal to wipe out its technical insolvency and get its finances out of the red.

MultiChoice CEO Calvo Mawela recently said the company is progressing well to address the technical insolvency, which should be a thing of the past later this month, thanks to the Sanlam deal.

In SENS announcements released on Monday, Sanlam and MultiChoice informed shareholders that all the conditions precedent to the transaction have been fulfilled, including approvals from the Competition Tribunal and the Prudential Authority.

Therefore, the transaction has now become unconditional and will become effective on 30 November 2024.

At the end of this month, MultiChoice will receive an upfront cash consideration of R1.2 billion for the 60% stake, with a potential performance-based cash earn-out, measured on 31 December 2026, of up to a maximum additional consideration of R1.5 billion.

For Sanlma, this is part of an acquisition spree the company has embarked on over the past year.

Sanlam has been performing exceptionally in recent years. In its latest results, for the six months through June 2024, the insurer grew its net result from financial services (NRFFS) by 14%. 

Sanlam’s life and health insurance operations grew NRFFS by 14%, general insurance reported a 16% rise, investment management performance was satisfactory with 10% growth, and the group’s credit and structuring operations recorded growth of 9%. 

This has allowed the insurer to grow its business by investing in opportunities it saw locally and abroad.

In August this year, the insurer got the green light from the Competition Commission to acquire Assupol for R6.5 billion.

The companies said this move would further strengthen their position in the market and enhance their ability to provide comprehensive insurance solutions to their respective clients. 

In September, Sanlam also announced that it is entering the race to enter India’s burgeoning asset and wealth management industry to tap opportunities in the world’s fastest-growing major economy.

The insurer told Bloomberg that it plans to expand its partnership with Shriram Capital Group in India by adding an equal joint venture covering wealth and advice services. This will double down on an initial 2005 investment that has already delivered results in the credit and insurance spaces.