Gupta-owned Oakbay Investments on Thursday slammed media reports about an approach to buy UBank as “speculation”, with “several significant untruths and misunderstandings”.
Oakbay Investments CEO Nazeem Howa told Fin24 in an emailed response that the company did express an early interest in UBank a couple of years ago, but voluntarily walked away from the process at an early stage – without even going through the due diligence process.
“That’s where direct contact with UBank ended. It’s as simple and unexciting as that.”
He was responding to an article on IOL that suggested the Guptas’ need for a bank gained momentum after South Africa’s four biggest banks closed their accounts.
IOL said the Guptas had for the past two years been quietly working on a plan to bypass South Africa’s major banks by acquiring their own financial institution.
Howa said as CEO, he led the Oakbay delegation’s interaction with UBank and its appointed advisors. “No Gupta family member was involved. That may not fit the media’s preferred narrative, but is the reality of the situation.”
However, Howa confirmed that he made an informal phone call to NUM general secretary David Sipunzi recently.
Sipunzi told IOL That “we have been approached unofficially about selling UBank to Oakbay. Nazeem called me and I told him what our stance is and the official channels he should follow”.
NUM, together with the Chamber of Mines, is a joint trustee of Teba Trust, which owns UBank.
To clarify its position, Oakbay gave a timeline of events regarding UBank:
- In October 2014, Oakbay became aware that UBank was interested in selling a majority stake in its company;
- At that time, Oakbay made an initial expression of interest to UBank, as did several other potential bidders;
- In April 2015, Oakbay was informed it had qualified for the second round of the bidding process;
- In May/June 2015, external advisors were appointed to compile a due diligence report on UBank for potential bidders – i.e. data on UBank’s operations – a standard procedure in financial transactions;
- In July/August 2015, bidders were told that access to the data would cost R500 000, and would be non-refundable to non-successful bidders;
- As a result, in August 2015, Oakbay voluntarily walked away from the process.
“To be clear, Oakbay did not access any due diligence data or make a binding offer for any stake in UBank and has had no direct contact with UBank since August 2015,” Oakbay said.
Oakbay has a right to bid for UBank – NUM
Sipunzi said he told Howa that Oakbay has the “right like many bidders before them to approach Teba Trust on the matter”, a statement by NUM explained on Thursday.
Oakbay would need authorisation from Finance Minister Pravin Gordhan if they buy more than 25% of the bank.
On the issue of Oakbay donating R1 million to the NUM to cover costs of its central committee meeting that took place in June, NUM said there is no controversy in Oakbay doing this.
“There are other businesses that donated to the NUM towards its central committee,” NUM said.
“We also want to put it categorically clear that there are no NUM members who are suspicious of the donation from Oakbay or other business towards our central committee. It is an insult to business that when they donate to trade unions it is meant to be a sweetener,” said Sipunzi.
Oakbay said they agreed with NUM’s statement regarding the donation.
The Chamber of Mines, which is another trustee of Teba Trust, said Oakbay had not approached them about UBank.
UBank requires R152 million for recapitalisation within two years to keep its banking license, the Business Day reported in June.
UBank’s management has also reportedly indicated that about R800 million would be needed for the bank to invest in upgrading its systems and information technology infrastructure.
It had until June 20 to present a long-term capital-injection plan to the Sarb.
Chamber of Mines spokesperson Charmane Russell said this plan was presented to Sarb on June 17.
“Work has been underway with UBank to fund the recapitalisation of the bank,” she said. “This process is ongoing.”