African Bank, which nearly went under a decade ago, has splashed R3.2-billion buying the commercial division of Sasfin – in a deal that cements its entry into the competitive business banking sector.
The acquisition of Sasfin’s commercial equipment finance (CEF) and commercial property finance (CPF) businesses, comes just a year after it bought Grindrod Bank, in a deal worth R1.5-billion.
When the bank was formed in 1964, a handful group of black businessmen did not have money, as they needed a R1-million to register the financial institution, they decided to fork out R70 each from their pockets, and 10 years later, African Bank started trading.
African Bank CEO Kennedy Bungane said on Friday the deal bolsters its diversification into business banking, ahead of its planned listing on the JSE, pencilled in for 2025.
“After months of engagement, we are pleased to have signed the deal, which enables us to further sustainably scale, diversify revenue and client base while de-risking our balance sheet. This further delivers on our Excelerate25 strategy to expand our core business and establish our footprint in the business banking market leveraging African Bank’s balance sheet and strong capital levels,” said Bungane.
“We are thrilled to welcome a core team of highly competent seasoned professionals to the African Bank family as we work together to enhance our client experience and take the offering to the next level.”
Sasfin said the transaction will be paid in cash and will be deployed within the Sasfin Holdings group to fund its remaining operations and redirect proceeds to the continued growth of its core businesses.
“Over the past year Sasfin has undertaken a detailed strategic review of its business. Our strategy is to focus on our core businesses, where we have strong capabilities and competitive advantages,” said Michael Sassoon, CEO of Sasfin Holdings.
“This has resulted in us entering into this mutually beneficial transaction.”
Sasfin Bank’s CEF had a loan book value of R2.3-billion at the end of February, while CPF lending book was valued at about R820-million.
The parties said the transaction is expected to be concluded by February next year, pending board approvals and the green light from competition authorities. African Bank was placed under curatorship in August 2014 by the registrar of banks and the minister of finance.
The curatorship was a protection mechanism that provided the SARB with the legal means to create the necessary space to implement a resolution plan to ensure the future viability of the company.
It was then recapitalised with R10-billion from commercial banks as well as the Reserve Bank.
Bungane said the Sasfin transactions were meant to bolster its listing appeal.
“This acquisition helps to diversify our income streams, balance sheet, the customers we serve as well as diversifying the risk profile to more secured lending, and so enhancing our compelling listing proposition.
“We also look forward to welcoming the team that will be joining African Bank as part of this transaction.”
The Government Employees’ Pension Fund owns 25% of African Bank, and a consortium of FirstRand Bank, Standard Bank, Absa, Nedbank, Capitec and Investec own another 25%.
The Reserve Bank is expected to sell its 50% stake in the bank following its listing.
