Santam to purchase remaining shares in Indwe

In a move to protect its interests, Santam announced a resolution to purchase the remaining shares in Indwe Broker Holdings (Indwe) for a consideration of R263 million to become the 100% shareholder of Indwe.

This offer to purchase was taken following a decision by the controlling shareholders, Pamodzi Investment Holdings and Thebe Investment Corporation, to dispose of their shares due to other investment opportunities. As a result of substantial increase in the shareholder value of Indwe since 2006, Pamodzi and Thebe decided to take profit and sell off their interest in Indwe. Despite expressions of interest from a number of potential buyers during the past year Pamodzi and Thebe preferred a transaction that allowed Santam to exercise their pre-emptive right as a shareholder and partner in order to allow Indwe to continue operating as a successful independent broker.

“As Santam’s core business is not to operate a brokerage service, this step is taken for the purpose of protecting our business interest, says Ian Kirk, Santam’s Chief Executive. Within Santam and once approved by all parties involved, Indwe will continue to be managed completely independently.

“Indwe will not function as an internal business unit, and the management will be expected to continue to deliver on its current exceptional performance levels backed by Santam’s reputation and financial strength,” adds Kirk.

“We are proud of the partnership between Pamodzi, Thebe and Santam that has supported Indwe in being well placed for continued growth”, says Ndaba Ntsele, Pamodzi’s CEO. “And we are very satisfied with the returns that we will be realizing from this investment. This transaction will make it possible for Pamodzi to move to the next level where we will be investing our ownfunds in a new private equity opportunity.”

Once this transaction has been concluded and approved, the wholly owned Indwe will be managed in the same way as Santam’s other partners, which is determined on the business relationship with each partner.

“Brokers are the cornerstone to our business. It is a good investment for Santam to ensure a successful business like Indwe is kept in tact,” says Kirk. “While Santam is not actively pursuing the opportunity to buy brokerages, we responded to a business opportunity appropriately to protect our interest.”

Approximately 60% of Indwe’s business is placed with Santam; most of which in personal lines. Since Indwe will be managed independently, they will continue to place business with other insurance companies. Apart from an impressive track record and history in South Africa, Indwe has also contributed significantly to black economic empowerment. Santam’s journey to economically create wider participation and opportunities for all South Africans has already ensured it a Level 4 BEE rating.

This transaction will require approval by the competition authorities and is subject to completing a due diligence review, conclusion of legal agreements and regulatory approval.