A deal by South Africa's banking conglomerate Absa to offload its Asset Management Unit to Sanlam hinted at this week could create a R900 billion mammoth to chafe the heels of the Public Investment Corporation. Photo: Supplied
A deal by South Africa's banking conglomerate Absa to offload its Asset Management Unit to Sanlam hinted at this week could create a R900 billion mammoth to chafe the heels of the Public Investment Corporation. Photo: Supplied

Absa to sell asset management unit to Sanlam?

By Banele Ginindza Time of article published May 24, 2021

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JOHANNESBURG - A DEAL by South Africa's banking conglomerate Absa to offload its Asset Management Unit to Sanlam hinted at this week could create a R900 billion mammoth to chafe the heels of the Public Investment Corporation.

There were no confirmations of the deal by either parties this week but analysis pondered whether the offering would also include the lucrative Money Market Fund.

Absa had by the end of last year about R270 billion under the management of its Asset Management wing.

Absa is reported to be mulling the decision, citing risk to its business due to clients' belief its investments “held the same degree of safety as cash in a savings account”.

Pundits said this week Absa was in talks with both Sanlam and partner African Rainbow Capital founded by Patrice Motsepe about the deal that could change South Africa's asset management landscape.

Though the terrain is dotted with a number of small players, the parties see room for growth as the banking group's interim chief executive Jason Quim trims the sails.

African Rainbow Capital got executive rights to Sanlam after it last year acquired a 25 percent stake in Sanlam's asset management wing.

Absa has taken a decision to unwind its $6bn ($430 million) money market fund.

The combination of Absa business with the Sanlam-owned equivalent would become one of the country's largest money managers, second perhaps to only the Public Investment Corporation.

Absa's clients sounded unsure of the implications of the deal as those who saved with the group preferred to have their investments handled on house platforms but were willing to give the benefit of the doubt to Sanlam's pole position in the sector.

“I find it convenient to have my banking and investing at the same institution, even if it is across different platforms,” a client noted on social media.

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