VENTURES: MiWay Is Now On The Highway
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A transaction that has seemingly gone unnoticed late last year by the mainstream media was the very low key sale by Stellenbosch-based PSG Group of its 18% interest in direct insurance operation, MiWay.
PSG let the stake go for R25 million, selling out to existing shareholders Sanlam and Santam.
The sale is somewhat surprising because more than a few punters in and around Stellenbosch were hopeful that MiWay – which is headed by the inventive Rene Otto – might be the next big thing in PSG’s portfolio of fledgling investments.
The price attached to PSG’s stake means MiWay is valued at around R140 million. While this seems a fair value for a fledgling business that no doubt has not even broken-even yet, one has to recognise that MiWay appears to be carving a meaningful niche in a competitive market by championing ‘convenient services’.
While it’s obviously too early to suggest MiWay is another Discovery or Outsurance, it is apparent that PSG exited this investment long before MiWay had a chance to show its real potential. And PSG has a reputation for sticking with its investments – even those operating in tough segments.
Initially the involvement of the entrepreneurial PSG at MiWay seemed to be the perfect foil for the institutional influence of Sanlam and Santam.
Clearly PSG’s decision to sell out was not based on a need to bring cash back to the centre. The last time CBN looked PSG had a more than adequate war chest.
So why did PSG bail?
The suggestion from market sources is that MiWay may have proved a conflict for PSG in that its specialist financial services subsidiary’s PSG Konsult is also earning a fair share of its keep from the insurance game.
MiWay is the second of PSG’s insurance/assurance investments that has passed to the greater Sanlam empire. Not too long ago PSG sold its stake in struggling niche life assurance business, Channel Life, to Sanlam.
Results from Sanlam in the next few years will no doubt show us if PSG has sacrificed well…
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