Andrew Bahlmann unpacks the implications of Ninety One and Sanlam deal for SA's asset management market
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Andrew Bahlmann
This is the latest in a series of deals involving Sanlam – though by far the biggest. The proposed deal between Ninety One and Sanlam presents both significant opportunities and risks.
One of the primary risks highlighted is the potential for reduced competition within South Africa’s asset management market. There is a concern that this merger between two of the largest asset managers could lead to market concentration, limiting consumer choice and reducing the competitive dynamics in an already concentrated market.
The Competition Commission will almost certainly investigate and if it intervenes it could delay or halt the deal, particularly if it believes that the merger would result in anti-competitive outcomes or higher fees for consumers.
Although both companies have complementary strengths - Ninety One with its investment culture and Sanlam with its distribution network- the integration of these entities could face challenges in aligning corporate cultures. The success of this deal will depend on how well Ninety One's investment philosophy meshes with Sanlam's operational structure, especially in light of Sanlam’s previous struggles with managing its portfolios post-AIMS acquisition (in 2016/17 Sanlam acquired AIMS Absa Investment Management Services).
From Ninety One’s perspective, access to Sanlam’s distribution network represents a significant opportunity for market expansion. As stated by the company, Sanlam’s strong presence in South Africa and its established channels could help Ninety One increase its footprint, particularly among clients in savings pools outside its current reach. This is a potential growth driver, particularly in a market where investment opportunities are often constrained by brand recognition and access to institutional channels.
The synergy between their teams should result in better asset management and improved returns, benefiting investors over the long term. Ninety One’s push for expansion into international private credit offerings is another benefit that the merger could accelerate. By securing Sanlam as an anchor investor in its international private credit strategies, Ninety One can diversify its portfolio and potentially increase its profitability, particularly in a low-interest-rate environment.
Andrew Bahlmann is the CEO of Corporate & Advisory, Deal Leaders International
BUSINESS REPORT