JSE-bound African Bank is a step closer to completing the purchase of Eskom’s R5.7bn staff home loan book, with the deal now subject to regulatory competition approvals.
Eskom on Thursday said it had concluded the negotiations on the terms of the transaction.
“The parties have now concluded and signed the various agreements to regulate the transaction. Following the conclusion of the agreements, the parties will proceed to make the applications to obtain applicable regulatory approvals, such as the Competition Commission,” Eskom said.
“Eskom will continue to keep stakeholders informed in regard to the conclusion of the disposal.”
Eskom in December picked African Bank as the preferred bidder for its staff home loan book and assets.
The deal was initially expected to be concluded in the first half of this year.
The deal marks a milestone for both companies, though for different reasons. For Eskom, the deal fulfils one of the conditions imposed by the National Treasury in a R254bn debt relief package to the entity. For African Bank, it strengthens its foothold in the secured lending space.
The transaction is in line with African Bank’s Excelerate25 strategy, with the acquisition aiming to diversify the lender’s product offering and increase its capabilities and presence in the secured home loan lending market.
The deal involves Eskom Finance Company and Nqaba Finance 1. Nqaba was incorporated in 2005 and buys eligible mortgage loans originated and serviced by Eskom Finance Company.
Launched in 2021, African Bank’s Excelerate25 strategy makes a case for a scalable, diversified and sustainable business with a compelling listing proposition.
African Bank in 2023 set its sights on the lucrative home loans market and a pilot project for its staff is under way, CFO Anbann Chetti said
African Bank, which has an ambition to list on the JSE, has been bulking up its portfolio over the past three years.
The company bought Grindrod Bank for R1.5bn in May 2022, accelerating its entry into the SA business banking sector. The transaction introduced more than R12.5bn in funding liabilities — most of that is business deposits — which are new to the group.
That was followed by the R3.2bn purchase of Sasfin Bank’s commercial equipment finance and commercial property finance units.
African Bank has three main sources of funding, including bonds issued under its domestic medium-term note programme that are listed on the JSE.
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