UK BANK HSBC has just weeks to come up with a concrete offer for a controlling stake in Nedbank, South Africa’s fourth largest bank, in a deal that would extend its reach into emerging markets.
HSBC yesterday entered into exclusive talks to buy 70 per cent of Nedbank’s shares, including a 52 per cent stake held by insurer Old Mutual.
The British bank now has until mid-October to come up with a firm offer.
HSBC is understood to have signalled it would be willing to pay more for the shares than its rival bidder Standard Chartered, although a price will not be agreed until a formal offer is made.
Standard Chartered already has an African franchise and would have needed to raise equity for the deal, so was not willing to pay a high price.
HSBC was also more successful in persuading the country’s authorities – who are reluctant to see too many companies fall prey to foreign ownership – that it would be a strong custodian of the bank.
“Africa is a very political place – and HSBC lined up the regulators better than StanChart,” said someone with knowledge of the talks.
Analysts at Credit Suisse, which advises Nedbank in South Africa, have estimated the bank is worth 160 South African Rand (€17.16) per share, a premium of about 15 per cent to yesterday’s closing price of 139.31 Rand.
Such a price would value Nedbank at about €8.8 billion, making Old Mutual’s 52 per cent stake worth just over €4.5 billion.
A controlling stake in Nedbank would hand HSBC a foothold in a fast-growing economy, and one that is gaining prominence in trade flows with China.
“This would fill in one of the gaps in HSBC’s footprint,” said Raul Sinha, banking analyst at Nomura.
Nedbank is the smallest of South Africa’s big four banks but would provide a platform to expand into the continent. – (Copyright The Financial Times Limited 2010)
