Investec to net R1.7bn from Assupol-Sanlam merger

Investec, the niche private banking and wealth management group, is in line for a R1.7bn cash injection from the proposed merger between SA’s largest nonbanking financial services group and smaller rival Assupol.

The R6.5bn merger was announced earlier this year, as Sanlam unfolds its strategy under Paul Hanratty to build a fortress position in SA.

Investec owns an indirect stake in Assupol through its shareholding in Bud Group, formerly Investec Equity Partners.

The Johannesburg and London financial services major in its 2024 annual report released before its AGM in August said there was good progress in the realisation of its noncore SA investment portfolio.

It said the proposed disposal of Assupol, a significant asset within the Bud Group, was part of the assets earmarked to facilitate Investec’s exit from Bud Group.

“Bud Group has been restructured to facilitate the exit of Investec and certain other IEP Group shareholders over a period. This will be achieved through a realisation of certain assets with Investec receiving [about] 59% of these proceeds,” the lender said.

“A material portion of the Bud Group’s assets (including Assupol) are subject to sales processes, some of which are well advanced. Assupol and Sanlam have announced the proposed disposal of Assupol to Sanlam, which transaction is subject to regulatory approval. Investec’s share of Assupol proceeds is estimated to be [about] R1.75bn (about £73m).”

Hanratty said the bid for Assupol was meant to derive long-term value for Sanlam shareholders by increasing its exposure in the broad middle market in which the insurer had been underweight.

Should the tie-up pass regulatory hurdles, it will cause Assupol to become a member of Sanlam’s retail mass cluster.

Assupol, which had gross insurance premium revenue of more than R5bn at June 2023, will continue trading under its name.

Bud Group has diversified growth businesses across the following platforms: chemicals and minerals, industrial services, building materials, and financial services.

Investec held a 36.4% stake in the Bud Group by March 31.

The Bud Group has a presence in 12 African countries, employing about 7,000 people. One of the companies it owns is Cerebos, market leader in the retail salt market in SA with extended distribution into Southern Africa.

The Bud Group also owns Corobrik, manufacturer, distributor and marketer of clay bricks, and Concord Cranes, which specialises in crane hire solutions across Southern Africa.

khumalok@businesslive.co.za