Sanlam Emerging Markets acquires 51% of MCIS Zurich for R1,25BIn

From SENS

Sanlam Emerging Markets Proprietary Limited (SEM) has announced the Sale and Purchase Agreement (SPA) between SEM and Koperasi MCIS Berhad (Koperasi) has been signed, and all conditions precedent have been met, for SEM to acquire 51% of the shares of MCIS Zurich Insurance Berhad (MCIS Zurich) for approximately ZAR1.25 billion (Ringgit Malaysia 387.6 million).

SEM will reach its 51% interest in two phases – firstly through the acquisition of a 40% interest from Koperasi (in a back-to back transaction with Zurich Asia Holdings Limited (Zurich), followed by a further 11% through a take-over offer to minority shareholders that will directly follow SEM's initial 40% acquisition. Should there be insufficient minority acceptances through the take-over offer, the additional shares necessary to reach a 51% interest will be purchased directly from Koperasi.

The transaction is in line with Sanlam's stated strategy to pursue value growth opportunities into, amongst others, the South East Asia region. In May last year, SEM, the cluster within the Sanlam Group tasked with expansion into emerging markets, acquired a 49% stake in the Malaysian niche short-term insurer Pacific & Orient Insurance Co. Berhad
(POI).

MCIS Zurich is a life and general insurance business in Malaysia and was formed after a merger between MCIS Insurance (a local composite insurer with over 60 years of experience in the Malaysian market) and Zurich. MCIS Zurich currently operates with approximately 2800 life agents, 600 general agents and has a footprint of 26 branches in Malaysia.

Under Malaysia's regulatory regime, an investor may not do business under more than one life or general insurance license, unless the second is a Takaful (Sharia-compliant insurance) license. SEM will therefore not be able to maintain an interest in another general insurance business in Malaysia due to its existing holding in POI. As a result, MCIS Zurich will seek to sell or find an alternative solution for the general insurance business.

Mr Heinie Werth, Chief Executive Officer of SEM says: "We view our partnership with MCIS Zurich as an excellent business opportunity with a company which has a sound understanding of the local business environment and market conditions.

"Malaysia is a key part of Sanlam's future growth strategy and the acquisition of a majority shareholding in MCIS Zurich will entrench our presence in Malaysia. We believe that our industry experience and expertise offers us significant opportunity to add value to and build a sustainable business."

According to Mr Kevin Jones, Chief Executive Officer of MCIS Zurich, the partnership with SEM signals the beginning of a new chapter in the illustrious 60-year history of the company. "We will face the future with confidence and continue to serve our customers with dedication."

Werth adds that SEM believes MCIS Zurich is an ideal investment with years' experience in the local market and with an extensive branch network and agency force.

SEM is currently doing business in India, Malaysia and 15 countries in Africa.