NEDBANK is to acquire a 20% shareholding in West African banking group Ecobank Transnational Incorporated by converting its $285m loan to the bank into an equity stake.
The move, which was largely expected by the market, helps the local bank catch up with its rivals in Africa as Ecobank is present in 36 countries.
As part of the deal Nedbank will subscribe in cash for new Ecobank shares for a total of $493.4m, with Ecobank repaying Nedbank’s 2011 loan out of the subscription proceeds.
Nedbank is 52% majority owned by Old Mutual plc, which has a primary listing on the London Stock Exchange and secondary listings on several African exchanges, including the JSE. Old Mutual and Ecobank are already joint venture partners in insurance in Nigeria and Ecobank and Nedbank Group established their strategic business alliance in 2008.
Nedbank Group CE Mike Brown called the move "an important step".
"It offers our shareholders participation in earnings growth from the faster growing markets in sub-Saharan Africa," he said.
Ecobank group CEO Albert Essien called it a "win-win" for both companies.
"It is in our mutual interest to ensure that this alliance grows from strength to strength," he said.
Nedbank’s share price had not reacted soon after the announcement, remaining down 0.47% at R216 on a negative day for all banking counters.
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