African Bank to acquire Johann Rupert-linked Grindrod in $97-million deal

African Bank Limited, a South African retail bank led by Kennedy Bungane, has made an offer to acquire Grindrod Bank and Grindrod Financial Holdings n a deal valued at R1.5 billion ($97 million) as part of a concerted effort to enter South Africa’s increasingly competitive business banking market.

Grindrod Bank and Grindrod Financial Holdings is Grindrod Limited’s banking subsidiary and financial services holding.

Grindrod is a freight logistics and shipping services company owned in part by Remgro Limited, the investment holding company of South African billionaire Johan Rupert. The South African company is split into three divisions: freight services, shipping, and financial services.

Grindrod Bank, a 96.83-percent subsidiary of Grindrod Financial Holdings, has grown into a highly competitive, specialized financial institution since its inception in 1994.

Grindrod Limited, a holding company with more than 100 years of experience in the logistics, transportation, and freight industries in South Africa, reopened discussions with potential buyers last month for its South African banking business, Grindrod Bank (GRDB), and its financial services operation, Grindrod Financial Holdings (GFH).

African Bank recently announced its plans to acquire 100 percent of GFH and 100 percent of the preference shares issued by GRDB – the Johannesburg Stock Exchange-listed freight group’s commercial and industrial property finance divisions.

The $97-million transaction is expected to accelerate African Bank’s entry into South Africa’s business banking sector following the unlisted retail bank’s announcement earlier this year of the formation of its business banking division as part of a strategy to diversify and develop a fully-fledged middle-of-the-pyramid business banking offering.

The total cash consideration of R1.5 billion ($97 million) is payable to Grindrod for the disposal of Grindrod Bank’s issued preference share capital, with the balance payable to GFH for the disposal of GFH’s issued ordinary share capital.

African Bank CEO Kennedy Bungane said, “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.”

According to Grindrod Bank CEO David Polkinghorne, the bank has had a number of suitors over the years. However, its strategic and client alignment with African Bank is advantageous.