HSBC wants to buy up to 70% of South African Nedbank
August 23, 2010 – 6:10 pmHSBC is in exclusive talks to acquire a controlling stake in Nedbank, fourth largest bank in South Africa, an operation that could reach 5.37 billion euros and enable the first European bank to increase its presence in a region strongly growth.
HSBC and the Insurer Anglo-South African Old Mutual, Nedbank, which controls, announced Monday in separate statements have incurred these exclusive discussions.
Old Mutual, which is undergoing reorganization and strategic aims to reduce debt, said that HSBC would acquire up to 70% of Nedbank as part of a transaction where the amount could rise to 49.9 billion rand (5.37 billion euros) on the basis of current market capitalization of Nedbank.
It was not clear immediately that HSBC obtains official approval of South African control.HSBC is already present in South Africa where it offers services including commercial banks.
"THE RIGHT THING TO DO FOR HSBC"
HSBC UK but very historically located in China and listed in Hong Kong, is increasingly threatened by the South African bank Standard Bank, owned 20% by Industrial and Commercial Bank of China, and seeks to position itself as a door entry into Africa.
For HSBC, Standard Chartered lagged behind in Africa, Nedbank acquisition would strengthen its presence on a continent rich in natural resources where many Chinese customers seeking to do business.
"It's the right thing to do if it wants HSBC to focus on emerging markets," said Dominic Chan, an analyst at BNP Paribas.
"Trade between Africa and China has grown very rapidly, and HSBC is not the same presence (in Africa) and Standard Chartered, which makes this acquisition particularly crucial (the bank) wants to continue his development. "
Errol Kruger, the head of the authority of South African banking sector regulator, has told Reuters on Monday it was too early to comment on this transaction.
"They still have to submit all applications they need to achieve (the project) and we need to think about," he said in a telephone interview.
In exchange, following the announcement, shares Nedbank and Old Mutual jumped by 6.7% and 4.3% at midday, however, that HSBC took 0.82%.
OLD MUTUAL DISCUSSED WITH OTHER A PRETENDER
The CEO of Old Mutual, Julian Roberts, told Reuters his group wanted to get rid of its entire stake in Nedbank, which is 52%, but the exact amount that he would give would depend on minority shareholders.
Nedbank should remain listed in South Africa and Julian Roberts said he would not have entered into exclusive negotiations without the hope that the authorities give the green light.
"If we stay with a small stake, it will be very well and we will manage it later," he said.
The press had previously reported that Standard Chartered could make a bid for Nedbank.
Julian Roberts said that his group had discussed with other parties, but declined to give any details.
He also refused to give information on the potential value of the transaction.
Standard Chartered declined to make comment. A source close to the bank however said it was interested in Nedbank but was worried about having to pay too much.
The action Nedbank is currently trading around 1.3 times book value expected for a year, against a multiple of 1.6 and 1.3 Standard Bank to HSBC, according to data compiled by Thomson Reuters Starmine.
According to Dominic Chan, the operation would continue until a reasonable ratio between 1.8 and 1.9.
HSBC was advised by Lazard Whereas Old Mutual under the guidance of Lexicon, Rothschild and Merrill Lynch Bank of America. Credit Suisse advises Nedbank for its part.
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