Sanlam plans to leverage TymeBank’s technology platform for its personal loans business

Speaking at a briefing on the company’s interim results for the six months to the end of June, chief executive Paul Hanratty noted the acquisition of 25% of African Rainbow Capital Financial Services Holdings (ARC FSH) as a portfolio transaction as far back as 2021. 

Sanlam has deepened its strategic partnership with Ubuntu-Botho by taking a 25% stake in ARC Financial Services Investments (ARC FSI). 

“Sanlam has benefited from this transaction in a number of ways. The estate assets, which really are shareholder assets, invested in the ARC FSI portfolio have earned a return of 24% per annum,” he said, adding that Sanlam has explored strategic opportunities with companies inside the ARC FSI portfolio. 

“Significant opportunities have been developed with Capital Legacy and Alexforbes. The (R3.9-billion) deal announced earlier this week takes this partnership further, as Sanlam will now have a 25% stake in the entire financial services portfolio of ARC, and the two largest assets that Sanlam will now have exposure to are Tymebank and Ooba,” he said.

Sanlam will pay R2.4-billion rand in cash and will swap its 25% shareholding in ARC FSI – valued at R1.5-billion – for an equivalent value of shares in the investment holding company. 

In June this year, TymeBank was engaged in its fourth capital raise and looking to raise $125-million, which would push its valuation above $1-billion, putting it firmly in unicorn status.

Sanlam is currently in the process of bringing TymeBank in as a key technology partner to support its personal loans business, which was purchased from First Rand. 

Hanratty says plans are afoot to move the personal loans business off the legacy technology stack that it runs on to a more modern stack that will enhance digital development. This makes for good synergy with TymeBank, which is currently the fastest-growing digital bank in the country and is likely to hit the 10 million customer mark soon.

In addition to its spectacular local growth, TymeBank plans to list on the New York Stock Exchange and the JSE in 2028.

“We’ve always been clear that Sanlam does not intend entering the banking industry. We now have an indirect 12.5% stake in TymeBank, and we view this in much the same way as we view our stake in Shriram Finance – as an adequate investment to allow us to meaningfully participate in the relevant ecosystem.  

“We are exploring how to develop the insurance offerings for this ecosystem, and how to make banking services available to our clients,” Hanratty said.

It is just the latest in a series of large transactions by Sanlam. In February this year, Sanlam announced the R6.5-billion purchase of Assupol, pending approval from regulators and Assupol shareholders. Two months later, Sanlam said it was going to increase its effective economic shareholding in the group’s insurance businesses in India, Shriram Life Insurance and Shriram General Insurance to more than 50%.

Then in June this year, Sanlam revealed it wanted to buy 60% of MultiChoice’s insurance business. The transaction, which is subject to regulatory approval, offers Sanlam significant cross-sell opportunities into MultiChoice’s extensive client base across the continent. 

Hanratty said management saw “a great deal of potential in this business going forward, given that the subscriber base is excellent and the premium collection system is extremely efficient”. 

Sanlam’s share price shifted up 15% during the period under review (January to 1 July 2024), but only moved up 1% yesterday, closing at R85.84. DM