Sasfin’s Strategic Banking Shift

  • Sasfin Bank Limited, a subsidiary of Sasfin Holdings, announced the sale of its Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses, valued at R3.26 billion, to African Bank Limited.
  • Strategic Pivot for Sasfin Holdings: The move follows Sasfin Holdings' strategic review, aiming to enhance its core businesses and maximize shareholder value by divesting non-core assets, including the CEF and CPF businesses.
  • African Bank's Expansion Strategy: African Bank Limited, backed by a consortium of major entities, aims to diversify its client base and expand its business banking portfolio, having recently acquired Grindrod Bank Limited, marking its entry into the business banking sector.
By Lethabo Ntsoane

In a significant move within the South African banking landscape, Sasfin Bank Limited, a subsidiary of Sasfin Holdings Limited, has announced the sale of its Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses. The deal, valued at approximately R3.26 billion, marks a strategic pivot for Sasfin Holdings as it streamlines its operations to focus on core business units.

The transaction, categorized as a Category 1 Disposal under the JSE Listings Requirements, involves Sasfin Bank Limited selling its CEF and CPF businesses, including the loan books, goodwill, trade receivables, and transferring employees, to African Bank Limited. The deal also includes the transfer of various shares and claims related to the CPF Business. The purchase price is structured intricately, involving calculations based on the loan book values and profits, with payments to be made both on the Closing Date and within 90 days thereafter.

The move comes following Sasfin Holdings’ strategic review, aimed at enhancing its competitive edge by divesting non-core assets. Sasfin’s focus now turns to strengthening its core businesses, including Wealth Management and Rental Finance, alongside a more concentrated Banking division. The decision to shed certain business units reflects the company’s strategic commitment to maximizing shareholder value.

African Bank Limited, the purchaser in this deal, is backed by a consortium comprising prominent entities such as the Government Employees Pension Fund, the South African Reserve Bank Limited, Absa Group Limited, Capitec Bank Holdings Limited, FirstRand Limited, Investec Limited, and Nedbank Group Limited. This acquisition is in line with African Bank’s strategy to expand its business banking portfolio and diversify its client base. Notably, African Bank recently concluded the acquisition of Grindrod Bank Limited, marking its foray into the business banking sector.

The deal is still subject to several suspensive conditions, including regulatory approvals and shareholder consent. Upon completion, African Bank Limited will automatically assume Sasfin Bank Limited’s position in relevant employee contracts, as per section 197 of the Labour Relations Act No 66 of 1995.

Below is a summary of the key financial aspects of the deal, as outlined in the announcement:

ComponentValue (R)
CEF BusinessR2.44 billion
– CEF Loan BookR2.34 billion (approx.)
– GoodwillR100 million
CPF BusinessRapprox. 798 million
– CPF Loan BookR708 million (approx.)
– Agterskot Amounts33.3% of post-Closing profits
CPF Shares & ClaimsApprox. R112 million
Total ConsiderationR3.26 billion

The news has sparked interest among industry experts and investors, with stakeholders closely watching as the deal progresses through its final stages. For Sasfin Holdings, this strategic move signifies a focused approach towards sustainable growth and value creation, ensuring a more agile and competitive stance in the ever-evolving South African banking sector.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo