Sanlam eyes India wealth management after BlackRock, Jio join contest

Insurer plans to build out its partnership with Shriram Capital Group in India by adding an equal joint venture covering wealth and advice services, doubling down on an initial 2005 investment

Sanlam Ltd. is joining the race to enter India’s burgeoning asset- and wealth-management industry as Africa’s biggest insurer by market value seeks to tap opportunities in the world’s fastest-growing major economy.

 

The insurer plans to build out its partnership with Shriram Capital Group in the South Asian nation by adding an equal joint venture covering wealth and advice services, doubling down on an initial 2005 investment that has already delivered results in the credit and insurance spaces.  

“A large number of people are breaking out of the real poverty trap, so they’re able to start focusing on providing for the future,” Sanlam Chief Executive Officer Paul Hanratty said in an interview Thursday. “India is really at that point where a huge chunk of the population are now able to save and invest for the future.”

The International Monetary Fund expects India’s $3.9 trillion economy to expand 6.8 per cent this year. That compares with a forecast for 0.9 per cent growth for South Africa, Sanlam’s home market. The South Asian nation is expected to generate $730 billion of wealth through 2028, according to Boston Consulting Group, and that’s enticing firms including HSBC Holdings Plc and Barclays Plc to expand. 

State Bank of India, which has more than 22,500 branches in the country, is deploying 2,000 bankers to woo the rich. Blackrock Inc., the world’s biggest fund manager, in April signed an equal joint venture with billionaire Mukesh Ambani’s Jio Financial Services Ltd. to set up a wealth-management business and also form a brokerage company in India. 

The two entities formed a joint venture to set up an Indian asset-management business in July 2023. 

“That’s a very hot area in India — everybody’s trying to get into it and we are very well positioned to start up,” Hanratty said. “We’ve got a huge distribution footprint, so we’ve just got to get the business and the proposition right, and then just gradually start growing it into our existing basis of branches and customers.”

For the six months ended June 30, Sanlam’s India business generated about 16 per cent of profit, up from 10 per cent in 2021. 

The insurer said headline earnings climbed 43 per cent in the period from a year earlier, buoyed by gains in life and health insurance, a surge in general insurance, and a recovery in investment management. The so-called net result from financial services — the company’s preferred profit measure — rose 19 per cent per share.

“The operating environment has been a little bit better in the first half of 2024,” Hanratty said, citing the successful conclusion of South Africa’s elections in May, where the inability to produce an outright winner saw the African National Congress — which has ruled the country since 1994 — establish a multiparty government with nine other entities.

A turnaround at general-insurance unit Santam Ltd., and a strong performance in its African operations that include a joint venture with Germany’s Allianz SE, also boosted earnings.”

Sanlam took a 910 million-rand impairment on AfroCentric Investment Corp., a South African health-administration company in which it holds a majority stake. 

Sanlam climbed as much as 2.5 per cent before paring gains to 1.6 per cent by 3:28 p.m. in Johannesburg. The advance has boosted its year-to-date gains to 18 per cent, compares with an 12 per cent advance in the FTSE/JSE Life Insurance Index over the same period. 

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