JOHANNESBURG, May 3 (Reuters) – Sanlam, the South African group, announced on Monday that it would acquire an additional 22.8% stake in Moroccan insurer SAHAM Assurance for 1.98 billion rands ($137.09 million).

This transaction comes after Sanlam, South Africa's largest insurer, indicated its desire to accelerate growth elsewhere on the continent, due to difficult market conditions in its domestic market which are weighing on its growth.

The transaction would bring its direct and indirect stake in SAHAM Assurance, whose products include home, health and automobile insurance, to 84.5%. The price will be paid in cash and financed through Sanlam's debt facilities.

Among the benefits of this transaction is "the opportunity for Sanlam… to strengthen its direct presence in North Africa and French-speaking West Africa", as well as to explore further partnerships to support growth in the region.

SAHAM Assurance, listed in Casablanca, was already 61.7% owned by San JV, an investment vehicle majority-owned by a Sanlam subsidiary specializing in emerging markets as well as by its short-term insurance subsidiary Santam. (SNTJ.J).

The insurer will purchase these shares, at a price of 2,101 rands per share, from its Moroccan partner and businessman Said Alj as well as from two entities related to him.

As part of the transaction, the sellers have agreed to reinvest 50% of the sale proceeds to acquire Sanlam shares on the open market in the coming months, shares which will be held for at least two years.

Sanam, a Moroccan holding company active notably in finance and commercial real estate and chaired by Said Alj, will continue to provide Sanlam with economic and commercial advice on its local operations in the years to come.

Sanlam shares were down 0.55% at 0937 GMT.

($1 = 14.4434 rand)

Reporting by Emma Rumney Editing by Promit Mukherjee

Article sources: REUTERS