For the ever-shrinking JSE, it never rains but it pours. Santam, the short-term insurer known for its “brolly” logo, looks set to depart from the JSE early next year following an offer from its controlling shareholder, life assurance giant Sanlam.
Santam, which is popular with dividend seekers, has been listed for more than 60 years. Its departure is one of a slew of recent delistings. Proposals have recently been made to delist two long-standing stocks: chemicals group Omnia (market value: R19bn) and niche property company Putprop (R313m) are both subject to buyout offers that will trigger a departure from the JSE.
Several other companies are teed up for delisting as well, including investment counters Trematon, Zeder and EPE Capital, which are all in the wind-down stage. In the past year, private education business Curro, helium group Renergen, industrial conglomerate Barloworld, assurance group Clientèle, investment counter Astoria, tech group Metrofile and property developer Balwin have all left the JSE.
Overall, the JSE has lost more than 300 listings, mostly through corporate action, over the past 15 years — a startling statistic considering that there are now only about 265 left on the bourse. The JSE has, however, managed to grow its collective market capitalisation over that period to about R25-trillion, thanks mainly to the hosting of secondary listings of large international stocks.
The news of Sanlam’s plans to buy out its 62.7%-owned short-term insurance subsidiary was not exactly surprising. In fact, some market watchers have wondered why it took Sanlam so long to do that, given the advantages of operating as an integrated insurance group. A buyout also removes the cost and administration hassle of retaining two separate listings. Old Mutual, Sanlam’s oldest rival, bought out its short-term insurance subsidiary, Mutual & Federal, in 2010.
A stiff premium
Sanlam is prepared to stump up for full control of Santam, which has a market value of about R55bn. Sanlam will fork out R505 per Santam share in a cash offer that represents a stiff 26% premium to the short-term insurer’s opening price of just under R400 on Monday.
Once Sanlam’s buyout of Santam is concluded, the JSE will be left with just one pukka short-term insurance company: Outsurance. The JSE once hosted a pack of these insurers that included — aside from Santam and Mutual & Federal — SA Eagle (later Zurich Insurance), Guardian National, Commercial Union and the short-lived Conduit Capital.
The chances of a new short-term insurance listing in the foreseeable future are probably between slim and zero.
