Sanlam to buy 60% of MultiChoice's insurance business

Sanlam will buy a 60% stake in MultiChoice's insurance business for R1.2bn in cash up front and a potential performance-based earn-out of up to R1.5bn, the groups said on Tuesday.

MultiChoice, Africa's biggest pay-TV company, said while its insurance business has demonstrated substantial growth in South Africa, its ambition to expand locally and in Africa “requires a step-up in resources, expertise and technology”.

“Sanlam's extensive presence and expertise in the African continent, coupled with its track record of success in insurance ventures with non-insurers, positions it strongly for a strategic venture with MultiChoice,” the companies said in a joint statement.

The potential cash earn-out payment is contingent upon the total gross written premium generated by the insurance business for the year ending December 31 2026, they added.

A pre-acquisition dividend of R59m will also be declared by MultiChoice's insurance business.

Shares in Sanlam were up nearly 5% on Tuesday morning, while MultiChoice inched up 0.36%.

MultiChoice will retain a 40% interest in the insurance business and 40% in the broader commercial venture with Sanlam.

The deal gives Sanlam an opportunity to further expand its insurance and financial services business in Africa, the companies said. Opportunities outside South Africa will be facilitated through its SanlamAllianz business.

MultiChoice has a subscriber base of 21-million households in 50 African countries, while Sanlam operates in 31 countries, including eight of the top 10 largest African economies.