The South African financial services group Sanlam is to acquire London-based wealth manager Merchant Securities in a cash deal valued at around £12.2 million ($19.5 million).

Sanlam has said that it is seeing increasing demand for global wealth management services from high net worth South Africans due to the of the relaxation and potential abolition in due course of exchange controls. As such, it regards the addition of Merchant Securities’ advisory and execution services as an important building block in the expansion of Sanlam’s UK business.

The deal is subject to approval from the UK regulator and shareholders.

“This potential acquisition would facilitate our entry into the UK stockbroking market, and supports our strategy to expand our UK activities.  The successful completion of this transaction will expand our existing product and service offering to both our South African and UK high net worth client base, and would also enable us to provide clients with a global execution service from within our group,” said Daniël Kriel, director of Sanlam Private Investment Holding UK and chief executive of Sanlam Private Investments.

Sanlam already has a UK wealth presence through Principal Investment Management, which became part of the Johannesburg and Namibian-listed group in 2008.