Ninety One Secures Long-Term Strategic Partnership with Sanlam
Why we think this is good
The announcement outlines a significant long-term strategic partnership between Ninety One and Sanlam, which is expected to be earnings and dividend accretive for Ninety One from inception. The transaction provides Ninety One with preferred access to Sanlam's South African distribution network, representing a substantial revenue opportunity. While there are some short-term dilutive impacts for Sanlam, the long-term benefits of the partnership appear to outweigh the near-term costs.
Key Points
- Ninety One and Sanlam have entered into a 15-year strategic relationship
- Ninety One will be granted preferred access to Sanlam's South African distribution network
- Sanlam will receive a 12.3% equity stake in Ninety One as consideration
- The transaction is expected to be earnings and dividend accretive for Ninety One from inception
- For Sanlam, the transaction is anticipated to be marginally dilutive in the initial year but become accretive from year three onwards
Summary
Ninety One and Sanlam have executed key operative agreements to establish a long-term strategic relationship, whereby Sanlam will appoint Ninety One as its primary active asset manager for local and global products with preferred access to Sanlam's South African distribution network. As consideration, the Sanlam Group will receive a 12.3% equity stake in Ninety One. The transaction is expected to be earnings and dividend accretive for Ninety One from inception, while for Sanlam, it is anticipated to be marginally dilutive in the initial year but become accretive from year three onwards.