[Johannesburg, SOUTH AFRICA] Convergent banking and IT group
Nedcor announced a number of measures on Monday
designed to consolidate its IT investments, which will result in the banking group becoming the
second largest IT stock on the Johannesburg Stock Exchange (JSE).
Nedcor announced two measures designed to raise its IT profile, upping the value of
its technological investments to R9.1 billion (US $1.3-billion).
The first measure will see Nedcor swap its existing 20 percent stake in Dimension Data
International for a 10 percent holding in the LSE-listed parent company,
Dimension Data.
By transferring this shareholding between the international and London-listed Didata
operations, Nedcor will be able to report a R5.2 billion (US $753 million) gain in Didata
stock pushing the value of its investment in the IT company to over R8 billion.
The company revealed, however, that it is considering converting a portion of this
equity into cash, settling instead for a lesser eight to nine percent stake plus a cash
amount of about R1.6 billion (US $231.7 million).
The second Nedcor initiative is the acquisition of a 25.1 percent stake of the IQ Business
Group for R142.4 million (US $20.6 million).
Together, these two announcements catapult Nedcor into the top echelon of the
JSE's IT companies.
Speaking yesterday, Nedcor Financial Director Stuart Morris revealed that Nedcor will
now become the second largest IT stock listed on the Johannesburg Stock Exchange,
trailing Didata, but ahead of another international high-flyer,
Datatec. THE PATTERN OF FOREIGN ENTRY IN THE FINANCIAL MARKETS OF EMERGING COUNTRIES::
when stock market valuations were extremely high. Nedcor Ltd(Old Mutual PLC) Stanbic. SA. SA. 2389.0. 1. 1. Merger. 1999. Standard Chartered Bank PLC
http://www.bis.org/publ/cgfs22bdi.pdfHOME |
Nedcor's decision, for all the headlines that it has spawned, was not an unexpected
one.
Speculation was rife last month that the banking group would be making a switch of
this nature within a few months, fueled by comments from Nedcor's CE Richard
Laubscher.
Two weeks ago Laubscher indicated that his group would be focusing on expanding
its IT profile and suggested that along with two acquisitions planned for later in
August, the group would be reassessing its Didata shareholding.
Only one of these anticipated acquisitions has been announced so far by Nedcor, the
R142.4 million (US $20.6 million) IQ deal.
In terms of the IQ deal, Nedcor retain an option to up their stake in the as-yet unlisted
IQ Business Group to 45.1 percent after two years. Capital One Financial Corp.::
Canada, France, and South Africa (through a joint venture with SA-based Nedcor) water at 30 knots after a second or two, it catches up to you!
http://mason.wm.edu/NR/rdonlyres/01E3CC55-A0CC-4304-A8D4-3A5BFE02Financial_Corporation.pdfHOME |
The regional context: South African Investment in post-Apartheid ::
As the fifth largest industrial company in SA, packing can become disorganized. Stock can also be near the expiry date sometimes.
http://www.codesria.org/Links/conferences/dakar/miller.pdfHOME |
Since the banking group's attempt to assume control over rival Stanbic floundered
three months ago, the company has been aggressively pursuing an IT expansion
policy, seeking to capture an unassailable lead in the convergent banking and
technology sector.
Beginning by taking a 20 percent stake in corporate ISP, The Internet Solution, Nedcor then
snapped up 26% of smart card company Aplitec and subsequently merged its NedTel
Cellular operation with Nashua's cellular division.
In July, the company invested $10 million for a 75 percent stake in the Indian IT company,
Nihilent Technologies and two weeks ago launched an e-procurement solution,
Miraculum, along with Old Mutual and Didata.
Even taking into account Stanbic's bluebean.com online banking offering launched last
week, the speed at which Nedcor has been expanding into this sector make it easily the
dominant player in the South African convergent banking and IT sector.
Laubscher dismissed notions that the bank might appear willing to trade development
of its banking services for increased expansion into the IT sector.
"The key is an integrated e-commerce environment as opposed to a series of disparate
offerings unconnected with each other," he said.
Investors appeared unconcerned about these announcements potentially blurring
Nedcor's banking focus, snapping up shares in the company and driving the price up
1.6 percent to R161.60.
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