Stringent conditions for Sanlam, Welwitschia deal
Sanlam Namibia will have to comply with stringent conditions issued by the Namibian Competition Commission (NaCC) as part of its conditional approval of the acquisition of Welwitschia Insurance Brokers from Bank Windhoek Holdings (BWH).
This comes as NaCC had raised concern over Sanlam’s ownership of a controlling interest in short-term insurer, Santam Namibia, which does business with Welwitschia, an insurance broker.
“The commission during its investigation found that the acquiring group has interest in Santam Namibia Limited, a short term insurance provider active in Namibia and a customer to Welwitschia.
“Hence, the commission identified that there was a likelihood that the merger would result in the exchange of information between the target undertaking and Santam Namibia Limited, which information exchange might have anti-competitive effects as envisioned in terms of section 47(2) of the Competition Act, 2 of 2003,” NaCC Senior Economist: Mergers and Acquisitions, Jowetha Andima told the Windhoek Observer.
Sanlam’s subsidiary, Santam Namibia, according to the NaCC conditions, will not be allowed to second any board members or staff to the newly acquired business to represent its interest, a decision which most companies do to bring the entity in line with its operations.
“For as long as Welwitschia Insurance Brokers remains a broker as defined in terms of the Short-term Insurance Act (Act 4 of 1998); no board member or employee of Santam Namibia Limited may be appointed as a board member of Welwitschia Insurance Brokers (Pty) Ltd; and no Welwitschia employee or board member may serve as a board member for Santam Namibia Limited,” Andima said.
Sanlam remained tight lipped on the deal, which was concluded last month.
The insurance giant was not forthcoming on inquiries made on the price paid for the 31-year-old insurance broking business and rationale of the acquisition considering it already has exposure to the short-term business through Santam Namibia.
“We may only confirm that the Namibian Competition Commission approved the transaction on the 10th of August, however, please note that the transaction between Sanlam and Welwitschia is at an infancy stage. We will further communicate once we are in a position to disclose more information on this matter,” Sanlam Chief Executive Officer, Tertius Stears said.
With Sanlam and BWH mum on the details of the deal, including whether the financial services group had paid cash for the business, speculation is rife that a share swap could be at play, allowing BWH indirect exposure to the insurance sector while shoring up its interest in Sanlam Namibia.
BWH already has a 29.5 percent direct shareholding in Sanlam Namibia and a 28 percent shareholding in Santam Namibia.
Welwitschia Insurance Brokers was initially acquired by BWH 19 years ago, seeking exposure to the country’s insurance sector.
Welwitschia specialises in all types of corporate, commercial, SME, marine, aviation and personal short-term insurance.
Namibia now has 15 registered short-term insurance companies, including NamibRe and 17 long-term insurance companies according to the Namibia Financial Institutions Supervisory Authority (Namfisa).