The SA Reserve Bank (SARB) says it is planning to list African Bank rather than sell it directly to investors after expressions of interest from prospective buyers were deemed unsatisfactory.
The SARB, which owns 50% of African Bank, had appointed corporate financiers including Rothschild, Bank of America and Moshe Capital, to advise it on a planned two-phase process that would allow it to exit its stake either through a sale to investors or via a possible listing. It had raised concerns about its so-called triple conflict of interest in African Bank given that it is the largest shareholder, the regulator and the lender of last resort to the bank, which was placed under curatorship in 2014 after its predecessor almost collapsed.
However, the Bank appears to have ruled out selling its stake in African Bank directly to investors after being left unimpressed with their indicative offers.
“After due consideration of the expressions of interest that were received, the SARB has concluded that none of the interested investors would be suitable to acquire the Sarb’s shareholding at this stage,” the Bank said in a statement on Tuesday. “The SARB will work closely with ABHL [African Bank Holdings Ltd] and the rest of the shareholders and thus proceed with the IPO [initial public offering] process.”
In the first phase of the planned African Bank stake sale, shortlisted bidders were invited to submit nonbinding offers to existing shareholders, which also include the Government Employees Pension Fund (GEPF), which holds 25%, and a banking consortium that holds an equal 25% through holdings by FirstRand (7%), Standard Bank (6%), Absa Trading and Investment (5%), Nedbank (4%), Investec (2%) and Capitec (1%).
The plan was for the favoured nonbinding offers to be converted into binding offers before the end of June, which would have left African Bank with one or two cornerstone investors. African Bank CEO Kennedy Bungane told Business Day in November that the plan was for none of these cornerstone investors to have outright control of the lender.
Whether the issue of relinquishing outright control was the sticking point in closing a deal is unclear but it still leaves the SARB and other African Bank shareholders with the option to list the bank directly on the JSE for purchase by institutional and other investors. The SARB said on Tuesday the timing of African Bank’s planned listing would depend on market conditions while the period leading up to that process would provide the company with an opportunity to continue with its turnaround strategy.
The SARB said in the statement on Tuesday said the potential buyers from which it had received and reviewed expressions of interest for African Bank included both local and international investors.
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