/ 29 May 2009

Imperial in talks with Nedbank about selling bank stake

South Africa’s Imperial Holdings is in talks about selling its 49,9% stake in asset financier Imperial Bank Ltd to joint owner Nedbank Group, it said on Friday.

Imperial and Nedbank each own about 50% of Imperial Bank, which provides loans for vehicles and property, and which had net interest income of R1,7-billion as of December 31 2008.

Shares in Imperial rose about 4% after the announcement and one analyst said the deal would allow it to focus on its main activities of car retail and rental and logistics.

”Selling the stake is probably part of a new strategy, and it might give them more time and energy to focus on its core business,” one analyst said.

By 11:34GMT, shares in Imperial Holdings were up 2,01% to R59,98, outpacing a firmer JSE Mid-cap index, while Nedbank stock was up 0,93% to R91,39.

Imperial, which provided no further details about the discussions, said that, if concluded, the deal may affect the price of its shares. Nedbank said a further announcement would be made in due course.

Analysts were unable to say how much Nedbank, South Africa’s fourth biggest bank, would pay for the stake but said it made strategic sense for the bank.

”Nedbank provides funding [for Imperial Bank], it probably makes sense for them,” a Cape Town-based analyst said, adding Nedbank would need to diversify Imperial Bank away from reliance on Imperial Group’s car and logistics businesses.

Nedbank currently provides risk management support to the joint venture, while Imperial provides access to its extensive network of business operations throughout South Africa. — Reuters