JOHANNESBURG Insurers Old Mutual (OML.L) (OMLJ.J) and Sanlam (SLMJ.J) are in talks to set up a joint venture to buy JPMorgan's (JPM.N) South African fund administration unit, a senior Sanlam executive said on Tuesday.
The deal would give Sanlam and London-based Old Mutual control of the back-office unit that administers investments for fund managers, said Kobus Moller, Sanlam's financial director.
"Sanlam and Old Mutual are the two biggest clients of that unit, so I think it makes sense," Moller said.
"The terms still have to be decided on, so it's still early in the process."
A spokeswoman for JPMorgan declined to comment.
The U.S. investment bank announced plans last year to boost its presence in fast-growing frontier African markets with a full branch in Nigeria and representative offices in Ghana and Kenya to add to its regional headquarters in Johannesburg.
Although several Western banks have announced plans to bulk up in Africa, some efforts appear to be delayed by the euro zone debt crisis and stricter regulations on capital.
Last November, Credit Agricole (CAGR.PA) said it was shutting down its 60-year-old South African investment banking unit, to help it meet new capital rules.
Bloomberg reported the sale of the unit on JPMorgan unit on Monday, citing another Sanlam executive, Johan van der Merwe.
Shares of Sanlam, which has operations in seven African countries and is South Africa's second-largest insurer by market value, were up 2.3 percent at 30.65 rand at 5:44 a.m. ET.
The strength of Sanlam's share price reflected general bullishness about the outlook for South African financials, one fund manager said.
"Sanlam has been strong recently. Strong equity markets support valuations of life companies. Financials have been generally strong lately," said Lebogang Molebatsi, head of financials research at Stanlib.
Shares of Old Mutual were up 0.3 percent at 18.10 rand.
(Reporting by David Dolan and Helen Nyambura-Mwaura)