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Sanlam eyes R100m stake in fintech firm

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 15 Aug 2017
EasyEquities is a disruptive, technology-focused fintech company.
EasyEquities is a disruptive, technology-focused fintech company.

Financial services group Sanlam is looking to acquire a 30% stake of JSE-listed Purple Group's online investment platform EasyEquities in a deal worth R100 million.

The deal will be done via Sanlam's wholly-owned subsidiary Sanlam Investment Holdings (SIH).

In a SENS statement issued yesterday, the JSE-listed Purple said SIH will acquire 450 000 ordinary shares, constituting 30% of all shares in EasyEquities from Purple Group.

EasyEquities is a disruptive, technology-focused fintech company that owns and operates an online investment platform.

Under the deal, SIH will acquire a 30% shareholding in EasyEquities for a consideration of R100 million. The purchase consideration will be settled in cash and be utilised by Purple Group and its other subsidiaries to settle inter-group loans currently owing to First World Trader.

Ultimately, the purchase consideration will, through settlement of these inter-group loans, capitalise EasyEquities with R100 million, which will, in turn, be utilised to fund a proposed specific repurchase of shares issued by Purple Group to SIH.

The remainder of the proceeds will be utilised to fund the future development of the EasyEquities Investment Platform and the working capital requirements of the fintech company.

The fintech firm launched during October 2014 and has, to date, been funded by the earnings of the other business units operating within the Purple Group and through funding procured by the group through small capital raisings.

"The rapid growth of EasyEquities has necessitated the need to seek out additional funding from a strategic partner that brings with it the necessary capital to fund the growth and development of the platform over the next 24 to 36 months," says Purple Group.

"In addition to capital, the partner was identified on the basis that it would broaden market access through established distribution channels both locally and abroad."

The Purple board says it believes its relationship with SIH would provide EasyEquities with invaluable insights and guidance within the investment industry in SA and assist in providing access to various international jurisdictions.

"In this regard, we believe that our partnership with SIH could result in numerous opportunities for SIH to leverage off EasyEquities' technology capabilities," Purple Group says in the statement.

"The EasyEquities transaction with Sanlam Investments provides our fintech winner with added capital, skills and the ability to continue on the path we're on - aggressive growth in client numbers, products on the site for client benefit and a way for all South Africans to access the financial markets - in South Africa and excitingly also in the US," says Charles Savage, CEO of Purple Group.

"We also look forward to announcing our international growth plans where the collaboration with Sanlam Investments provides invaluable insights, guidance and access to various jurisdictions."

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