Domestic brokerage house, SMC Group, has entered into a joint venture arm of South African financial services giant Sanlam Ltd to set up asset management and wealth management business in the country. The deal also involves Sanlam picking up a 5% stake in SMC for $50 million. Only in July this year BCCL had picked up a 2% stake in SMC for $17.5 million. Sanlam has subscribed to warrants of SMC which will ultimately create a 5% equity stake for Sanlam in SMC and its two flagship companies – SMC Global Securities Limited & SAM Global Securities Limited.
Sanlam was also looking to partner with Shriram Finance in India earlier this year for general insurance business, but the talks failed. Sanlam Group is the second largest listed financial services
group in South Africa, with a market capitalisation of US$7.7 billion (December 2007), and total assets under management and administration of US$77.8 billion.
“Following this JV, the Indian financial services space will see the further rise and transformation of SMC from our position as one of the largest securities brokerage house into a well diversified company, with enormous global reach and intellectual know-how in line with international best practice,” said S.C. Aggarwal, Chairman and MD, SMC. SMC claims to have more than 400,000 customers now. Millennium India Acquisition, a blank cheque firm, had acquired 15% stake in SMC for $40 million in may last year. Singhi Advisors were the investment bankers to SMC on the deal.
“This is the first step in our India investment strategy and a springboard for further expansion into the continent. For us it is a bold step into one of the biggest markets in the world and a transaction that is in line with our international expansion strategy of furthering our business scope into promising markets outside of South Africa,” said Johan van der Merwe, CEO of Sanlam Investments.