NEDBANK Group announced on Friday it had entered into an agreement to buy the shares in Imperial Bank that it does not own, Imperial Holdings ’ 49,9% stake, for R1,76bn.
The acquisition will be financed 60% in the form of Nedbank ordinary shares, which are being held as treasury shares, and the balance in cash.
Imperial Bank consists of four asset-based finance divisions: vehicle finance, supplier asset finance, property finance and professional finance. The bank was formed by Imperial Holdings to focus on motor vehicle finance for Imperial Group and other motor dealerships.
Imperial Bank branded its vehicle finance business Motor Finance Corporation (MFC) in 2001 and is an independent brand. The division holds total assets of about R30,3bn and reported a net profit of R68,6m in the six months to the end of June.
The property finance division, which focuses on medium-sized commercial mortgages and developments, holds assets of R8,4bn, and it generated a net profit of R41,4m in the six months to June. The supplier asset finance division, which focuses on niche capital goods such as vehicles and equipment used in the construction and mining industries, held assets of R3,5bn and had made a net profit of R9,6m by the end of the six-month period.
The professional finance division provides finance to about 8000 medical and dental professionals. The division held assets of R5,1bn and reported a net profit of R10,5m in the six months to June. Nedbank said the acquisition of Imperial Bank would allow the creation of a more efficient structure within which to conduct the combined operations. Nedbank would benefit from the skills housed separately in two operations as well as improve the scale and profitability of its vehicle asset financing business.
The acquisition would allow it to compete better in the motor dealership channel through the MFC brand and enable the cross- selling of a broad range of products to the Imperial Bank client base.
The “inefficient capital and funding arrangements” of the bank would also be eliminated.
Separately, Nedbank on Friday announced it intended to raise R1bn through the issue of preference shares this month.
Imperial Group’s share price gained 1,7% on Friday to R71,2 0. Nedbank’s share price fell 1,6 % to R107,5 0.
Sourced by businessday.co.za