THE South African Reserve Bank (SARB) said yesterday that it plans to list African Bank Holdings (ABH) on the JSE, as none of the interested investors for its 50 percent stake in the retail bank was suitable at this stage.
African Bank CEO Kennedy Bhungane said the planned listing was “great news” as culminated in the successful resolving of the curatorship over 7 years, and “more importantly” it resonated with the bank’s founding philosophy by entrepreneurs including Nafcoc of being “a bank for the people.”
On June 1, 2021 SARB announced it planned to dispose of its 50 percent shareholding in ABH, given the potential conflict as the regulator, the significant shareholder, and the lender of last resort to African Bank Limited.
The SARB appointed transaction advisers and then proceeded on an approach that focused on two potential exit options, namely a sale to investors, and an initial public offering (IPO).
Interested investors, both local and international, were invited to submit expressions of interest for the acquisition of the SARB’s shareholding.
“All the expressions of interest were considered, and consultation took place with relevant stakeholders involved in this process,” SARB said in a statement yesterday.
SARB said it intended to work closely with ABH and the rest of its shareholders and thus proceed with the IPO process.
The IPO will be a boost for the JSE, which saw zero IPOs last year and Africa’s biggest stock market has come under increasing criticism from investors who have seen the number of listings continuing to decline for various reasons, but also due to perceptions of high costs and an onerous compliance burden.
“The timing of the launch of the IPO will be dependent on prevailing market conditions. The period leading up to the IPO will provide ABHL the opportunity to continue with its successful turnaround and execute its accelerated growth strategy,” SARB said yesterday.
The other shareholders in ABH are the Government Employees Pension Fund, which holds a 25 percent stake, while a consortium of banks comprising FirstRand, Standard Bank, Absa, Nedbank, Investec and Capitec holds the remaining 25 percent.
African Bank was placed into curatorship in 2014 after a debt crisis. SARB then bought a 50 percent stake in the bank to save it from collapse, but didn’t want to be a long-term investor given the conflicts of interest. It had invited local and international investors to bid for its stake through transaction advisers Rothschild & Co, BofA Securities and Moshe Capital.
As of September 30, 2019, according to its annual report, ABH’s African Bank had total assets worth R28.9 billion, with shareholders’ equity of R10.7bn, and it employed some 3 886 people.
The bank returned to profitability in the year to September 31, 2021 with a profit of R534 million compared with a R27m loss in the 2020 financial year. It also ended the 2021 financial year with a strong balance sheet, good liquidity and high available cash resources of R9 billion to support a new growth strategy.
It had reported high retail deposit growth of 73 percent year-on-year, resulting in a R10.3 billion deposit book. It said at the time that strong collections and improved credit scorecards allowed for measured relaxation of conservative credit granting criteria.
BUSINESS REPORT ONLINE