SANLAM LIMITED - Acquisition Of A 25% Interest In African Rainbow Capital Financial Services Holdings Proprietary Limited

Acquisition Of A 25% Interest In African Rainbow Capital Financial Services Holdings Proprietary Limited

Sanlam Limited
(Incorporated in the Republic of South Africa)
Registration number 1959/001562/06
JSE share code: SLM
A2X share code: SLM
NSX share code: SLA
ISIN: ZAE000070660
("Sanlam")

Sanlam Life Insurance Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1998/021121/06)
Bond Issuer Code: BISLI
LEI: 378900E10332DF012A23
("Sanlam Life")


PROPOSED ACQUISITION OF A 25% INTEREST IN AFRICAN RAINBOW
CAPITAL FINANCIAL SERVICES HOLDINGS PROPRIETARY LIMITED BY
SANLAM LIFE INSURANCE LIMITED


1.     Introduction

The board of directors of Sanlam (the "Sanlam Board") is pleased to announce the
entry into definitive transaction agreements, which will result in Sanlam Life acquiring
a 25% interest in African Rainbow Capital Financial Services Holdings Proprietary
Limited ("ARC FSH"), subject to the fulfilment of certain suspensive conditions ("the
Proposed Transaction").

The Proposed Transaction entails:

(i)      Sanlam Life subscribing for ordinary shares in ARC FSH for a cash
         consideration of R2,413 million ("Subscription Transaction"); and
(ii)     Sanlam Life disposing of its 25% interest in ARC Financial Services
         Investments Proprietary Limited ("ARC FSI"), with a value of R1,492 million,
         to ARC FSH in exchange for the issue by ARC FSH of ordinary shares to the
         value of R1,492 million to Sanlam Life ("Asset for Share Transaction").

ARC FSH is the investment holding company for all the financial services investments
of the Ubuntu-Botho Investments Proprietary Limited ("UBI") group of companies
("UBI Group"), other than its shareholding in Sanlam, which is held directly by UBI.
Following the conclusion of the Proposed Transaction, ARC FSH will hold 100% of the
shares in ARC FSI, together with its existing investments in Tyme Bank, AI Fund,
CrossFin and Ooba.

ARC FSH is currently owned 50.1% by African Rainbow Capital Proprietary Limited
("ARC") and 49.9% by the ARC Fund, an en commandite partnership with UBI General
Partner Proprietary Limited ("UBI GP") being the general partner. ARC and UBI GP
are wholly owned subsidiaries of UBI. UBI is, for the purposes of the JSE Limited
("JSE") Listings Requirements, a material shareholder in Sanlam and, accordingly, is
a related party of Sanlam.

2.     Rationale for the Proposed Transaction

UBI is Sanlam's strategic empowerment partner and, in this context, ARC and Sanlam
partner in certain specific strategic initiatives in the financial services sector within
South Africa, towards delivering better customer propositions, increasing competition
as well as promoting financial inclusion. In furtherance of this objective, Sanlam
acquired a 25% non-controlling minority stake in ARC FSI in 2021, which has allowed
Sanlam to benefit from the growth of the ARC FSI portfolio, strengthen its market
presence in South Africa and expand on its financial inclusion imperative.

The Proposed Transaction is a natural extension of Sanlam's existing interest in ARC
FSI. Sanlam will continue to explore ways to collaborate strategically with ARC FSH
and its portfolio investments to enhance competition and to assist Sanlam in providing
holistic and integrated product offerings to its clients.

3. Consideration

Sanlam Life shall acquire 25% of the issued share capital of ARC FSH by way of:

(i)      the payment of a cash subscription consideration of R2,413 million under the
         Subscription Transaction, and
(ii)     the disposal of its 25% shareholding in ARC FSI, with a value of R1,492 million,
         to ARC FSH in exchange for shares to the value of R1,492 million in ARC FSH
         under the Asset for Share Transaction,

(collectively, the "Consideration").

Should the Proposed Transaction not be implemented by 31 August 2024, the
Consideration will increase at the prime interest rate from 1 September 2024 to the
effective date of the Proposed Transaction ("Effective Date").

4. Key terms of the Proposed Transaction

The Proposed Transaction is subject to the following suspensive conditions, namely:

(i)      the new ARC FSH memorandum of incorporation being filed at the Companies
         and Intellectual Property Commission; and
(ii)     the prescribed notice in terms of section 158(4)(b) of the Financial Sector
         Regulation Act, 9 of 2017 being filed with the Prudential Authority and the
         Prudential Authority having confirmed in writing to note the filing.

The definitive transaction agreements to give effect to the Proposed Transaction
contain warranties and indemnities customary for a transaction of its nature. The
definitive transaction agreements include a shareholders' agreement in respect of
ARC FSH, which incorporates reserved matters in respect of which ARC FSH
shareholders will need to agree, customary pre-emptive rights and deemed offer
provisions.

Sanlam Life will pay to ARC an outperformance fee based on the extent to which the
value of ARC FSH's investment in Tyme Investments Pte Limited (Asia) as at
30 June 2028 exceeds an annual hurdle rate of 14.64%. The outperformance fee
(inclusive of VAT) will be capped at R70 million.

5. Independent fairness opinion

In terms of paragraph 10.7 of the JSE Listings Requirements, the Proposed
Transaction is categorised as a small related party transaction.

Accordingly, the Sanlam Board is required to provide the JSE with written confirmation
from an independent professional expert confirming that the terms of the Proposed
Transaction are fair insofar as Sanlam shareholders are concerned (the "Fairness
Opinion").

The Sanlam Board appointed Deloitte & Touche Financial Advisory ("Deloitte") as
independent professional expert to provide it with the Fairness Opinion. Deloitte has
furnished an opinion to the Sanlam Board confirming that the terms of the Proposed
Transaction are fair insofar as Sanlam shareholders are concerned. This opinion has
been provided to the JSE.

The opinion of Deloitte will be available for inspection at Sanlam's registered office,
2 Strand Road, Bellville, 7530, for a period of 28 days from the release of this
announcement. It will also be made available during this period on request from
Sanlam's Company Secretary. Please email request to secretariat@sanlam.co.za.

6. Independent committee recommendation

The Sanlam Board established a committee of independent non-executive directors
("iNED Committee"), comprising all non-executive directors of Sanlam who are
independent of Sanlam and UBI, to evaluate matters involving Sanlam and the UBI
Group, which may give rise to conflict of interest.

Following the iNED Committee's consideration of the Proposed Transaction, it
recommended to the Sanlam Board that Sanlam Life enter into the Proposed
Transaction.

7. Financial information

In terms of ARC FSH's unaudited financial statements for the six months ended 31
December 2023 (prepared in accordance with the International Financial Reporting
Standard for Small and Medium-sized Entities):

•   ARC FSH's profit after tax amounted to R1,808 million; and
•   ARC FSH's net asset value amounted to R11,991 million.

In terms of ARC FSI's unaudited financial statements for the six months ended 31
December 2023 (prepared in accordance with the International Financial Reporting
Standard for Small and Medium-sized Entities):
•   ARC FSI's profit after tax amounted to R610 million; and
•   ARC FSI's net asset value amounted to R5,124 million.

Sanlam Life's 25% shareholding in ARC FSH shall be treated as an investment in an
associate.

Sanlam confirms that it is satisfied with the quality of the financial information as it
relates to the unaudited interim financial statements referred to above.

8. Effective Date

The Effective Date will be dependent on the fulfilment of the suspensive conditions to
the Proposed Transaction. The longstop date of the Proposed Transaction is
31 October 2024.

Bellville
2 September 2024

Enquiries
Sanlam Investor Relations
E-mail: ir@sanlam.co.za

Equity Sponsor to Sanlam
The Standard Bank of South Africa Limited

Debt Sponsor to Sanlam Life Insurance Limited
Rand Merchant Bank, a division of FirstRand Bank Limited

Independent Expert
Deloitte & Touche Financial Advisory

Legal Adviser to Sanlam
Webber Wentzel

Date: 02-09-2024 09:00:00
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