UPDATE 1-Vukile to buy Sanlam Properties asset management unit

* Vukile to buy Sanlam Properties asset management unit

* Deal to increase Sanlam shareholding in Vukile to 35.3 pct

* Option to buy properties from Sanlam life for 500 mln rand (Adds details)

JOHANNESBURG, June 11 (Reuters) - Property holding and investment firm Vukile (VKEJ.J) will buy the asset management unit of Sanlam Properties in a cash and share deal which would increase Sanlam's stake in Vukile to 35.3 percent. Sanlam said on Thursday the deal would be settled through the issue of 36.47 million new Vukile units at 910 cents per unit. Vukile would also have the option to buy properties from Sanlam Life valued at around 500 million rand ($61.99 million).

The acquisition of Sanlam Properties asset management business is valued at about 332 million rand. "The Sanlam group's focus is on a combination of fixed and listed property assets and it therefore makes sense for the entire function of property asset management to move to Vukile - a business which specialises and wishes to grow in this area," Johan van der Merwe, chief executive of Sanlam Investments, said in statement.

Vukile and Sanlam Properties have agreed to extend the existing asset management contract between them to September 30 to allow for sufficient time to implement the deal.

Sanlam's shares were 0.93 percent lower at 17.08 rand by 0922 GMT, underperforming a 0.13 percent firmer JSE financial index .JFINI (Reporting by Serena Chaudhry)