African Bank, the lender rescued by the South African government almost a decade ago, plans a pre-sale by March as it gears up for a full initial public offering in 2025.
The pre-IPO could allow South Africa’s central bank – which usually doesn’t hold such investments – to reduce the 50% shareholding it took in 2016 to prevent a collapse of what was then the nation’s biggest unsecured lender.
Other owners include the Government Employees Pension Fund with 25% and a consortium of local lenders, including Standard Bank and FirstRand.
The sale will not introduce new shareholders and will set up an employee share-ownership plan, according to CEO Kennedy Bungane.
“A pre-IPO that will be us derisking the IPO by making sure that there’s an alignment with a staff scheme, a management scheme, and then those of our current shareholders that want to stay the long haul with us,” he said in an interview Tuesday.
“Pre-IPO in 2024 by the first quarter, and a full exit of those shareholders that want to leave later in 2025 is on track.”
African Bank went into administration in 2014 under a pile of bad debt. It has since pared back risky loans while boosting growth via the 2022 acquisitions of Grindrod Financial Holdings and UBank.
Last month, the bank agreed to buy the commercial property and capital equipment financing businesses of Sasfin.
The bank’s after-tax profit fell by about a third in the financial year ended September to R505 million, driven by credit impairment charges on the consumer business as clients grapple with rising inflation and South Africa’s rolling power cuts.
The bank hopes to grow net interest income by targeting micro, small, and medium-sized enterprises and focusing on asset-backed loans for the retail sector.
It will rely on insurance and transactions from its four million customers to build non-interest revenue.
“We continue to focus on organic growth going forward, ensuring that the key signals and financial ratios we want to meet so that we are ready for a compelling listing proposition to investors in a short period of time,” Bungane said.