Speaking at a Parliamentary hearing on economic transformation in the financial sector on Wednesday, NEF CEO Philisiwe Mthethwa said the organisation was mulling over the possibility of acquiring Mercantile Bank for R12,2 billion.
“This is low-hanging fruit that could be scaled up. It addresses the need for black entrepreneurs,” Mthethwa was quoted as saying in a Fin24 report.
Last week, the bank’s Portuguese parent company, Caixa Geral de Depositos (CGD), announced that it’s put the South African bank up for sale, presenting the perfect opportunity for the government to transform the banking and financial services sector.
The proposed funding for the acquisition would come from a combined effort from the NEF, the Public Investment Corporation (PIC) as well as a black public participation through an initial public offering.
Alternatively, Mthethwa said there was also the option to become a 51% majority shareholder, where black investors would own the lion share and the government the rest. This option would split the funding burden.
Responding to the proposal, Mercantile Bank said on Wednesday that while it was “mindful” of the need for transformation in the industry and wanted to promote black economic empowerment in the country, it ultimately had to make the right decision to benefit existing shareholders, employees and clients.
“The Mercantile Bank Limited board of directors believes the impending sale creates an opportunity for Mercantile to have representation at a shareholder level for black investors. We wish to reiterate that our board of directors will only support a transaction that benefits our stakeholders, most important being our staff and clients,” the bank said in a statement.
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Mercantile said the NEF had yet to engage the bank with its proposal, but confirmed that it had received considerable interest from other potential buyers.
“We cannot presently divulge any further information relating to other interests expressed as the sale process has not yet formally begun,” the Mercantile said, adding that a team of advisors would soon be appointed to oversee the sale process which is expected to take about a year to conclude.
Additional source: Fin24