JOHANNESBURG (CU)_For several years, South Africa’s African Bank Ltd had established its focus on unsecured retail lending, when the firm’s new chief executive Kennedy Bungane shifted its strategy following his appointment in 2021. Accordingly, Bungane reintroduced business banking to the financial service provider, and is now looking to cement the firm’s entry to the sector with a multimillion-dollar deal.
African Bank on Thursday, announced that it had acquired 100 per cent of Grindrod Financial Holdings, a subsidiary of JSE-listed freight group Grindrod Limited. The deal, worth R1.5 billion (US$96.2 million), will give African Bank access to Grindrod Bank’s big corporate and business banking customer base in South Africa. The recent acquisition is also expected to provide African Bank and entry to the property finance market, as Grindrod holds a property finance division for the commercial and industrial property, offering bridging finance for landlords over and above mortgage loans.
According to Grindrod Bank’s chief executive David Polkinghorne, the firm has carved its niche in the highly contested business banking space in South Africa, which is why the bank has had several suitors over the years. The Durban-based commercial banking company was already a sizeable business for its parent company Grindrod Limited, having contributed R97 million, or 13.7 per cent of the group’s adjusted earnings last year.
Announcing the deal last week, Bungane said the acquisition would play a critical role in enabling African Bank realise its business banking aspirations, by enjoying access to an existing business banking customer base and valuable sectoral expertise. “We announced earlier this year the formation of our business banking division as part of a strategy to diversify and develop a fully-fledged middle of the pyramid business banking offering. This acquisition allows us to do that efficiently and rapidly,” African Bank’s chief executive said.
