Nedbank, the South African financial services group, has announced plans to sell its 21.2% stake in Ecobank Transnational Incorporated (ETI) as it sharpens focus on its operations in Southern and East Africa.
Chief Executive Officer, Jason Quinn said: “We would prefer to own or control all of the operations that we’re involved in. You can execute strategy much more deliberately when you own businesses.
The board has approved a formal plan to dispose of the investment, and we are currently engaging interested parties and, if a sale is concluded, it will be a clean deal.”
Nedbank noted that Ecobank’s operations in Central and West Africa have been negatively impacted by foreign exchange volatility since it acquired the stake in 2014.
Since then, it has earned R6.8 billion ($378.6 million) in associate income, but only R400 million has been realised through dividends. The bank said the Ecobank investment currently carries a value of R1.8 billion, with a market value of R1.9 billion.
The lender added that its board and management weighed the risks of holding the stake, citing regulatory uncertainty, the potential need for additional capital to avoid shareholding dilution, and the exit of several South African clients from the region, which has limited cross-selling opportunities.
Nedbank became Ecobank’s largest shareholder in 2008 through a $500 million investment, formalising the partnership in 2014. The planned sale will mark the end of a 17-year strategic alliance between the two banks.
