Sanlam Emerging Markets and Shriram Transport Finance Company

South African financial services group Sanlam announced today that it has acquired a 3,7% direct stake in Shriram Transport Finance Company (STFC) (registered in India) for close to R1 billion (the “transaction”).

Whereas Sanlam’s existing exposure to STFC is via the Group’s holding in Shriram Capital Limited (SCL), the shares acquired in terms of this transaction will be held directly by Sanlam Emerging Markets (SEM), the cluster within Sanlam responsible for financial services in emerging markets outside of South Africa. STFC is a commercial vehicle financing business, listed on both the Bombay and National Stock Exchanges in India, with a loan book of approximately R60 billion.

The transaction will take Sanlam’s effective holding in STFC to approximately 10% and is in line with the Group’s strategy to increase its holdings in existing partners where appropriate. The transaction with STFC augments Sanlam’s existing portfolio of businesses in Africa and Asia, in support of the Group's target of sustainable value creation in these growth markets. It further strengthens the existing relationship between Shriram and Sanlam.

Says Mr Heinie Werth, CEO of SEM: “This transaction is yet another highlight and a significant step in our efforts to meet our strategic objectives to diversify both geographically and into broader financial services. We are pleased with the progress we are making in this regard.”

“The transaction will facilitate Sanlam’s further access to the strong growth and profit generating capacity of the financing entities within the Shriram Group and in the Indian market. It is an important and logical next step in strengthening Sanlam’s, and particularly SEM’s, relationship with Shriram. The strong relationship that we continue to enjoy is further entrenched in the long term benefit for both companies," Werth says.

Werth further says he remains confident in the long term potential for an attractive return despite a somewhat challenging economic environment in India currently.

Sanlam has been in partnership with the Shriram Group of India in respect of life insurance (Shriram Life) since 2005 and short term insurance (Shriram General) since 2008.
Last year Sanlam concluded a further R2 billion investment in Shriram Capital Limited (SCL), the holding company for the financial services interests of the Shriram Group. Following that transaction, SEM effectively owns 26% of SCL.

This is not a categorised transaction in terms of the JSE Limited Listings Requirements.