Sanlam is acquiring 60% of MultiChoice’s insurance business, NMS Insurance Services (NMSIS), as well as a long-term arrangement to expand insurance and financial service offerings into MultiChoice’s African subscriber base, in a deal of about R2.7 billion.
Sanlam’s share price reached fresh highs at the announcement of the transaction yesterday, and after midday it was trading 8.9% higher at R83.26. That said, the share price of its biggest local competitor Old Mutual was also up substantially, by over 10% to R12.45 at the same time. MultiChoice’s share price traded one percent lower at R108.87 at that time.
Sanlam will pay R1.2bn upfront in cash to MultiChoice for the 60% stake, while a performance-based cash earn-out, of up to R1.5bn, contingent upon the amount of gross written premium generated (GWP) by NMSIS for the financial year ending December 31, 2026, will also be paid.
MultiChoice, which has subscribers in 50 countries in Africa, and which is currently being acquired by French broadcaster Canal+, will use the proceeds from the deal for working capital purposes. Sanlam, which has becoming a pan-African insurance and financial services leader as a core aspect of its strategy, already does business in more than 30 African countries.
Also, through the agreement, MultiChoice will retain a 40% stake in NMSIS and will have the same participation in the Africa-wide venture, allowing it to continue benefiting from the potential of this segment, while maximising value for its shareholders.
“Through this commercial arrangement, Sanlam and its affiliates have the opportunity to cross-sell financial services products to MultiChoice’s extensive and engaged subscriber base of 21 million households across 50 countries in Africa,” Sanlam CEO Paul Hanratty said in a statement yesterday.
Sanlam will leverage MultiChoice’s engagement channels and integrated payment collection capabilities to deliver the broader offerings to MultiChoice’s subscribers. Opportunities outside of South Africa would be facilitated through SanlamAllianz.
Hanratty said they were pleased about the coming together of the two groups to enhance insurance access in Africa.
“It affords us the opportunity to leverage our market footprints and technological capabilities, as well as provide synergies for the benefit of stakeholders,” he said.
For MultiChoice, the transaction was an opportunity to expand value-enhancing services such as insurance to its subscribers across Africa, leveraging Sanlam’s expertise and technology.
MultiChoice CEO Calvo Mawela said: “This collaboration is a strategic milestone. It not only allows us to increase the value we provide to our subscribers, but also enables us to leverage Sanlam’s expertise to drive growth and innovation in our insurance offerings across the continent. It is a nod to the incredible work done by our teams.”
NMSIS, a registered South African composite micro-insurer and authorised financial services provider, is licensed to underwrite both non-life and life insurance products. It has been writing insurance for 20 years, focusing on device, installation, funeral, subscription waiver and debt waiver insurance products.
The business had shown robust growth in recent years, and had increased its in-force policies 19% to 3.3 million for the year to March 31. GWP increased 36% year-on-year to R970m, and taxed profit was up 51.5% to R296m. NMSIS net asset value was R277m.
The Life products, introduced three years ago as NMSIS diversified beyond device insurance, experienced rapid growth and now accounted for 30% of in-force policies.
“NMSIS has enjoyed substantial traction and profitability in South Africa. Its growth ambitions, such as expanding its local product offering and geographic presence across Africa, require a step-up in resources, expertise and technology, which the acquisition by Sanlam will help unlock,” said Mawela.
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