Sanlam Limited (Sanlam) and MultiChoice Group Limited (MultiChoice) announced that they have entered into an agreement for Sanlam to acquire 60% of MultiChoice’s insurance business, NMS Insurance Services (NMSIS), as well as a long-term commercial arrangement to expand insurance and related financial service offerings into MultiChoice’s extensive African subscriber base.
Sanlam will pay an upfront cash consideration of R1.2 billion to MultiChoice for its 60% stake and a potential performance-based cash earn-out of up to a maximum consideration of R1.5 billion that is contingent upon the amount of gross written premium generated (GWP) by NMSIS for the financial year ending 31 December 2026.
MultiChoice will utilise the cash proceeds received from this transaction for working capital purposes. Also, through this agreement, MultiChoice retains a substantial 40% interest in NMSIS and will have the same participation in the Africa-wide venture, allowing it to continue benefiting from the high-growth 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 will leverage MultiChoice’s engagement channels and integrated payment collection capabilities to deliver these broader offerings to MultiChoice’s subscribers. Opportunities outside of South Africa will be facilitated through SanlamAllianz.
Sanlam Group CEO, Mr Paul Hanratty said: “We are pleased to announce the coming together of Sanlam and MultiChoice to enhance insurance access in Africa. It affords us the opportunity to leverage our respective market footprints and technological capabilities that will support growth and market penetration, as well as provide opportunities to realise synergies for the benefit of all stakeholders.”
For MultiChoice, the transaction represents an opportunity to expand its value-enhancing services such as insurance to its subscribers across Africa, leveraging the expertise and technology of Sanlam.
MultiChoice CEO, Mr Calvo Mawela said: “This collaboration with Sanlam is a strategic milestone for MultiChoice. 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 the past 20 years under the DStv brand of MultiChoice focussing on device, installation, funeral, subscription waiver and debt waiver insurance products.
The business has demonstrated robust growth in recent years, increasing its in-force policies by 19% to 3.3 million for the financial year ended 31 March 2024. The Life products, introduced three years ago as NMSIS diversified beyond device insurance, experienced rapid growth and now account for 30% of in-force policies.
NMSIS’s key financials for the year ended 31 March 2024, audited and prepared in terms of IFRS, were as follows:
- GWP increased 36% year-on-year to R970 million;
- Profit after tax increased 51% to R296 million; and
- The net asset value of NMSIS was R277 million.
NMSIS has enjoyed substantial traction and profitability in South Africa, as shown by these numbers. 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.
Sanlam will oversee the NMSIS operations through its Sanlam Fintech cluster, ensuring a seamless integration into the Sanlam Group and positioning NMSIS to meet its growth objectives.
The transaction is subject to the necessary regulatory approvals from the South African competition and regulatory authorities.
