Bidvest, which announced yet another offshore acquisition yesterday, plans to sell its bank through a restructuring of its financial services division.
The aim was to recycle capital and align the group’s interests in terms of strategy, while setting it up for its next phase of expansion, Bidvest CEO Mpumi Madisa said yesterday.
The group announced also that it is acquiring 100% of Canada-based Citron Hygiene from Birch Hill Equity Partners and other investors for an undisclosed sum. Citron serves about 50 000 customer locations from seven branches in Canada, four in the US and 10 in the UK.
In March at the release of interim results, Madisa said that the group was on the acquisition trail, this after already spending R3.2 billion on bringing nine new businesses into the fold over a six-month period.
Bidvest’s financial services division provides banking and related products and services to South African corporates, businesses and consumers through Bidvest Bank and FinGlobal. It also offers insurance products through Bidvest Insurance, Bidvest Life and Compendium.
“Considering the overall strategy and notwithstanding the solid performance of the financial services division, Bidvest’s board believes dedicated financial services ownership is required for the continued sustainability and prosperity of some of the companies in the division,” Madisa said.
She said the division’s strong post-pandemic financial performance was continuing.
The group strategy was to expand its blend of defensive, cyclical and growth assets in South Africa and internationally in niche services of hygiene, facilities management, and distribution of plumbing and related products, she said.
The ambition was to achieve scale and growth by maintaining a strong balance sheet, exercising financial discipline, and pursuing organic and acquisitive growth opportunities in the group’s areas of focus.
In light of this, Bidvest’s board had opted for a process to dispose of Bidvest Bank and FinGlobal.
The remaining short-term insurance businesses in the financial services division focus mainly on vehicle insurance cover and related value-added products.
These would be transferred to Bidvest’s automotive division. This aligned to the division’s strategy of diversifying into allied automotive services.The Bidvest Life disposal is under way.
Madisa said after the disposals Bidvest would comprise six divisions: services international; freight, services South Africa; commercial products; branded products; and automotive, with Adcock Ingram remaining a majority-owned Bidvest subsidiary company.
She said they would try to find an acquirer for the bank by the end of 2024.
In the 2023 financial year Bidvest Bank generated trading profit and operating income of R234 million and R219m, respectively.
The Bidvest Bank book which consists mainly of leased assets, loans and advances, totalled R5bn funded by deposits of R8bn. Cash and investment securities amounted to R6bn which included restricted cash from a group perspective of R4bn.
Citron is a provider of washroom hygiene products and services in the US, Canada and UK. It offers commercial washroom hygiene solutions, contracted menstrual hygiene products, consumables and equipment.
Bidvest said the hygiene services market was resilient with compelling unit economics. Structural growth drivers included hygiene and safety standards, a growing population, urbanisation as well as period dignity awareness.
Legislation around free vending of menstrual products in washrooms in North America added further growth momentum. Bidvest believed that the total addressable market in Citron’s North American territories was exponentially bigger than Citron’s current revenue.
BUSINESS REPORT