Sanlam Ltd., South Africa’s largest insurer, said it’s in talks to buy U.S. lender JPMorgan Chase & Co.’s fund administration unit to expand in its home market.
The insurer’s investment unit will form a joint venture with the asset management arm of London-based Old Mutual Plc to buy the operation, which oversees about 1 trillion rand ($127 billion), Johan van der Merwe, head of Sanlam’s investment unit, said by telephone from Cape Town today. Juliana Wheeler, a spokeswoman for JPMorgan in London, declined to comment.
The U.S. lender bought the South African fund-services business, formerly called TASC Administration, from Sanlam in 2004 to provide payment-processing and cash-management services for money managers. TASC was South Africa’s largest independent third-party administrator, with 140 employees, 15 clients and about 320 billion rand of assets under administration, JPMorgan said at the time. The Sanlam and Old Mutual units are JPMorgan’s largest fund-service clients in South Africa, according to Sanlam.
“JPMorgan had very good intentions when it started the business but has strategically decided to exit,” van der Merwe said. “JPMorgan is being very accommodating.”
The old TASC unit now has at least 200 employees who are likely to be moved into Sanlam and Old Mutual’s joint-venture company, Van der Merwe said. Diane Radley, chief executive officer of Old Mutual Investment Group in South Africa, didn’t immediately respond to a telephone message seeking comment.
The fund administration unit is part of New York-based JPMorgan’s treasury and securities operation, which posted a 3 percent decline in fourth-quarter profit from the year-earlier period. The bank began offering rand-clearing services in South Africa in November for the first time.
Maitland Group, a European-based fund administrator, is JPMorgan’s largest competitor in South Africa, according to Andre le Roux, business development manager for Maitland, who said his company has about 920 billion rand in funds under administration in South Africa. His firm is seeking to win clients from JPMorgan including Absa Asset Management Ltd., and Cadiz Holdings Ltd., he said.
Old Mutual fell 1.7 percent to 146.1 pence in London trading today. Sanlam slid 1.2 percent to 29.95 rand by the 5 p.m. close in Johannesburg.