This week,
RMB Holdings announced that it will transfer its 34% stake in FirstRand directly to shareholders. RMB Holdings is the largest shareholder in FirstRand, which owns FNB, Wesbank and RMB.
The stake - worth around R130 billion – will soon be held directly by RMB Holdings shareholders. Remgro will also unbundle its 4% stake in FirstRand. RMB and Remgro believe this move will unlock value. Their stakes in FirstRand are currently undervalued by the market.
This has significant implications, among them that a takeover of FirstRand becomes more likely. Not having one major shareholder means that it becomes easier for another suitor to hoover up shares on the open market. It can build up a sizeable stake at cheaper prices rather than having to negotiate with a dominate shareholder.
“We would not expect anything to happen on this front in the short to medium term, but it remains a possibility,” Peter Armitage, CEO of the investment manager Anchor, told Business Insider South Africa.
“If viewed from a global perspective, we would not expect US banks to be interested. This leaves Asia and Europe/UK. European and UK banks are in a more defensive mode and the likes of Barclays have exited - not entered - the SA market. The most likely candidates would most likely be Chinese.”
In 2008, the Chinese bank ICBC bought a 20% stake in Standard Bank. It remains the only South African bank with a sizeable foreign holding. After taking control of Absa in 2005, the UK’s Barclays divested in recent years.
“Given the slow SA economic prospects we have some way to before GDP growth potential puts banks on a higher growth trajectory,” Armitage added.
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