African Bank announced that it has entered into a binding heads of agreement with Sasfin Bank and Sasfin Private Equity Investment Holdings, a subsidiaries of the listed entity Sasfin), to acquire its Capital Equipment Finance (‘CEF’) and its Commercial Property Finance (‘CPF’) businesses, as going concerns in one indivisible transaction.
The value of the transaction is approximately R3.2 billion, using the 28 February 2023 net asset values for the CEF and CPF advances books, which will be adjusted at the closing date of the transaction.
The CEF business is valued at R2.4 billion, consisting of the advances book and a goodwill component, with the CPF business value determined at R820 million consisting of the advances book and associated shares and claims in this business.
The transaction is subject to various conditions precedent which are to be concluded by 28 February 2024, and include;
- requiring the favourable outcome of a due diligence review,
- board of director approvals,
- Prudential Authority and other regulatory approvals.
The parties acknowledge that the Prudential Authority is not a party to the agreement and cannot be held liable in terms of time stipulations, as it is subject to regulatory requirements that must be met before approvals can be granted.
“‘African Bank is on a journey to expand its core by looking for non-organic opportunities to scale and grow our business in line with our Excelerate25 strategic objectives. 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,” said African Bank’s Group Chief Executive Officer, Kennedy Bungane.
“We also look forward to welcoming the term that will be joining African Bank as part of this transaction.”
On 2 March 2023, Sasfin informed the market that it was conducting a strategic review. The result of this review is that Sasfin is implementing its new strategy to become a far more focused and streamlined business.
As a major step in this review process ,Sasfin has entered into binding heads of agreement to dispose of its capital equipment finance and commercial property finance businesses to African Bank.
“The proceeds of the transaction will be redirected to the continued growth of the Group’s core businesses and enhancing total return for shareholders,” Sasfin informed shareholders.
Post this transaction, Sasfin retains its Wealth, Rental Finance and focused Banking businesses.
“The Group is confident in the prospects of its core activities, both in terms of financial returns and competitive positioning.”
