{"id":824417,"date":"2025-05-21T07:00:00","date_gmt":"2025-05-21T05:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=824417"},"modified":"2025-05-21T13:25:46","modified_gmt":"2025-05-21T11:25:46","slug":"capitec-competitor-spending-billions-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/824417\/capitec-competitor-spending-billions-in-south-africa\/","title":{"rendered":"Capitec competitor spending billions in South Africa"},"content":{"rendered":"\n

African Bank is spending billions of rands on acquisitions as the Capitec competitor prepares for an Initial Public Offering (IPO).\u00a0<\/p>\n\n\n\n

African Bank has significantly expanded its operations since 2022, with multi-billion-rand deals involving Grindrod Bank, Sasfin and Eskom.<\/p>\n\n\n\n

African Bank’s primary business is unsecured micro-lending. This type of lending is high-risk and high-reward and typically leads to high credit impairments. Capitec dominates this market segment.<\/p>\n\n\n\n

However, with its multi-billion-rand acquisitions, African Bank is expanding into commercial, business and property-focused banking.<\/p>\n\n\n\n

In 2022, African Bank announced it would purchase business-focused Grindrod Bank from Grindrod Limited for R1.5 billion.<\/p>\n\n\n\n

The deal marked African Bank’s entry into the South African business banking sector. Its goal was to develop a fully-fledged middle-of-the-pyramid business banking offering.<\/p>\n\n\n\n

Grindrod’s business forms the foundation of African Bank’s Business and Commercial Division, which was transferred to African Bank in August 2024.<\/p>\n\n\n\n

On top of the Grindrod deal, African Bank further bolstered its diversification into business banking after taking over the Capital Equipment Finance and Commercial Property Finance loan books from Sasfin.<\/p>\n\n\n\n

The deal, valued at R3.25 billion, saw Sasfin’s employees move to African Bank, with the latter shifting out of banking to focus on its core wealth business.<\/p>\n\n\n\n

The deal received the necessary regulatory approvals on 1 August 2024, and the two operations were united under the African Bank banner.<\/p>\n\n\n\n

In late 2024, African Bank also announced its move into the secured home loan lending market, planning to take over Eskom’s staff home loan book.<\/p>\n\n\n\n

Through its Finance Company, Eskom has offered home loans to its employees, with instalments deducted from their salaries.<\/p>\n\n\n\n

As part of a roughly R250 billion bailout from the National Treasury, Eskom was told that it would need to dispose of the book.<\/p>\n\n\n\n

African Bank previously said that it expects the deal to be concluded by 31 May 2025, but this could vary due to the agreement’s regulatory needs.<\/p>\n\n\n\n

Why the big push <\/strong><\/h2>\n\n\n
\n
\"\"<\/a><\/figure><\/div>\n\n\n

The massive deals form part of African Bank’s Excelerate25 strategy, with the diversification done ahead of the group’s scheduled listing on the JSE.<\/p>\n\n\n\n

This comes 10 years after the bank was placed under curatorship by the South African Reserve Bank (SARB) due to poor lending practices, resulting in heavy write-downs of bad loans.<\/p>\n\n\n\n

The Reserve Bank now owns 50% of African Bank, with other major commercial banks, including its rival Capitec, and the Government Employee Pension Fund owning the remaining 50%.<\/p>\n\n\n\n

However, the Reserve Bank is the regulator of South Africa’s banking sector. African Bank will soon undergo an IPO so the Reserve Bank can sell its stake in the bank.<\/p>\n\n\n\n

Despite its title as Excelerate25, African Bank has delayed its proposed listing on the JSE from 2025 to late 2027.<\/p>\n\n\n\n

The delay in the listing comes after the bank scanned market and investor sentiments on the prevailing market conditions and critical factors for a successful IPO.<\/p>\n\n\n\n

Upon review, the group’s board decided to prioritise the de-risking of the IPO via a much larger pre-IPO set of transactions that would remove the BEE overhang on the listing.<\/p>\n\n\n\n

The bank also announced that it will list a much smaller portion of its shareholding as per the rescheduling of the listing date.<\/p>\n\n\n\n

The IPO journey was thus broken down into four main phases, namely:<\/p>\n\n\n\n

    \n
  1. Securing the Government Employee Pension Fund (GEPF) as an anchor shareholder with a much longer investment horizon beyond the IPO;<\/li>\n\n\n\n
  2. The implementation of staff and management ownership schemes.<\/li>\n\n\n\n
  3. The implementation of a black retail scheme; and<\/li>\n\n\n\n
  4. The final listing on the JSE will be done using the FY27 financial results, market conditions permitting.<\/li>\n<\/ol>\n\n\n\n

    Ahead of the listing, several financial metrics showed improvement for the year ended 30 September 2024.<\/p>\n\n\n\n

    Although net profit remained unchanged at R521 million in FY23 and R523 million in FY24, the group’s credit impairment charges improved by 20% to R2,709 million (FY23: R3,262 million).<\/p>\n\n\n\n

    This led to a drop in the group’s credit loss ratio from 8.0% to 6.3%, partly linked to the book’s diversification to secured lending.<\/p>\n\n\n\n

    For comparison, Capitec’s credit loss ratio improved from 8.7% to 6.9% in its most recent financial results amidst an improved economic outlook for South Africa. <\/p>\n","protected":false},"excerpt":{"rendered":"

    Africanbank is spending billions ahead of its listing on the JSE, which was delayed by at least two years. <\/p>\n","protected":false},"author":95,"featured_media":824441,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[961],"tags":[21099],"class_list":["post-824417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-africanbank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824417","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=824417"}],"version-history":[{"count":11,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824417\/revisions"}],"predecessor-version":[{"id":825027,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/824417\/revisions\/825027"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/824441"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=824417"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=824417"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=824417"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}