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South Africa:How much cost the acceptance of free market principles?
HSBC has emerged ahead of rival bidder Standard Chartered as the favorite to purchase the 52 percent stake in South Africa’s fourth-largest bank, owned by Old Mutual, the Africa’s biggest insurer. The likely acquisition of a majority by the British HSBC in the capital of South Africa’s Nedbank feeds all speculation. The deal could reach 1,009,045,377.03 US dollars (7 billion rand) going to the fund of the Old Mutual.
The group Old Mutual intention to sell its stake in Nedbank to HSBC is now reality. “Discussions are ongoing,” said the statement issued by the South African bank this weekend. For its part, HSBC had announced the news since August 23. In addition to the 52 % owned by Old Mutual, HSBC is planning to acquire additional shares in order to reach the 70 %. If the deal is materialised, it will be the second largest foreign direct investment (FDI) since the takeover of the ABSA by Barclays, 5 years ago.
The regulatory authority seems to support the operation, seeing it as a sign of confidence in the South African economy by the international market, and so far, there is no hostility showed by the Nebank shareholders. The minority shareholders could be eager to let go for a special bonus for any proposed purchase over 165 rand. This weekend, the share price was 147,49 at the Johannesburg Stock Exchange (JSE). However, the Public Investment Corporation Public Investment Corporation (CIP), a public shareholder, has indicated it would retain its 7 % whatever the proposal of HSBC could be. The British bank is expecting, with this acquisition, to definitively establish a toehold in Africa where the population is forecast to rise higher than that of India and China by 2050. It is also an opportunity for HSBC to take over the Standard Chartered Bank that has tried, in vain, to counter the offer on Nedbank before changing its mind.