Sanlam and TymeBank plan retail credit joint venture

Sanlam and TymeBank will form a retail credit joint venture focused on unsecured personal loans with an embedded credit life offering, with cross-selling opportunities between the two entities central to the deal.

The proposed deal, subject to approvals by the Prudential Authority and competition authorities, will see the establishment of a JV to go after SA’s competitive unsecured personal loans market — a market Capitec used to build a diversified group. 

Sanlam Personal Loans (SPL) provides unsecured personal loans of R5,000-R300,000 on repayment terms of 12 months to six years at a fixed interest rate. The SPL loan book size was R5bn at end-December 2024.

In terms of the transaction, SPL will establish a new registered credit provider operating company (JVCo) for originating and administering personal loans to customers.

The existing SPL loan generation business, excluding its retail credit loan book, will be sold to JVCo in exchange for the issue of JVCo shares.

TymeBank will acquire 50% of the shares in JVCo from SPL for R31.5m and SPL will sell 50% of its retail credit loan book at the completion of the transaction to TymeBank. The price for the SPL loan book will be about R400m plus the capital value.

TymeBank will share 50% of the credit life insurance results regarding the JVCo loan book.

SPL will issue a reference share to TymeBank on the terms set out in a subscription agreement, which will target 50% of the credit life profits. The subscription price payable by TymeBank to SPL for the reference share would be about R320m, the companies said.

Sanlam said the collaboration with TymeBank was an important component of its credit strategy.

“The two companies have complementary customer bases and skill sets, promising excellent growth opportunities,” Sanlam said.

“The scale benefits will support a competitive unsecured lending offering under the Sanlam and TymeBank customer facing brands.”

TymeBank, majority owned by Patrice Motsepe’s investment vehicle, African Rainbow Capital Investments, has quickly amassed about 11-million customers after going to market just more than five years ago.

The bank has set an ambition of a more than 30% return on equity, a measure of how much profit a company makes for each rand that the owners invest in it, and a cost-to-income ratio, a measure of efficiency.

The move by Sanlam to augment its credit strategy comes just months before its rival Old Mutual is set to launch its banking offering — OM Bank.

Like TymeBank, OM Bank is pursuing a digital only strategy. Sanlam last year shot down talk it is interested in opening its own bank.

Sanlam CEO Paul Hanratty said at times the financial services would rather pursue partnerships. 

“I am quite allergic to this concept of banking. We have a big credit advice business and we increasingly do credit products, but we are not ready to become a full-scale bank,” Hanratty said, responding to a question from an investor.

“It doesn’t mean we won’t partner with a retail bank to provide services. We actually have a very good payments business with Sanlam.”

Motsepe’s Ubuntu-Botho Investments (UBI) is Sanlam’s largest shareholder, owning 14% of the group — making the JV between Sanlam and TymeBank a related transaction.

To this end, Sanlam said it had put together a committee of independent nonexecutive directors, independent of the group and UBI, in considering the deal.

“Following the independent nonexecutive directors committee’s consideration of the proposed credit transaction, it recommended to the Sanlam board that Sanlam enter into the proposed credit transaction.”

mackenziej@arena.africa