Nedbank concludes R1.8bn Ecobank stake sale, refocuses on Southern African markets

Nedbank has concluded the sale of its stake in Nigerian lender Ecobank Transnational Incorporated (ETI) to Bosquet Investments for R1.8 billion and will pencil in a R7bn cumulative loss on its books from the investment.

The sale of the 21.2% stake has been approved by the requisite regulators, and the disposal was concluded on December 17, 2023. Bosquet Investments is the private investment vehicle of Alain Nkontchou, the managing partner and co-founder of Enko Capital Management, an Africa focused asset management company. Nedbank first invested in ETI in 2011, when it acquired a 20% stake for about R5.4bn at the time, as part of a strategic alliance between the two banks.

Nedbank said Thursday the disposal will have no impact on the headlie earnings a share (HEPS) forecast it made earlier this month, that diluted HEPS for the 2025 financial year to December 31, will either be in line with the previous year, or increase by low single digits, while return on equity is expected to be 15% or higher, excluding the impact of a R600 million commercial settlement with Transnet. The group's medium term target ROE is 17%.

The disposal will see the cumulative foreign exchange losses and fair value adjustments of about R7bn loss related to the investment recycled to a loss in the current reporting period, and consequently, basic earnings per share are expected to decrease by at least 20% for the financial year from the 3 610 cents reported in the 2022 financial year.

Nedbank said the disposal represents a reset of its strategy in Africa, which is to focus on the Southern African Development Community and East Africa. The group's Nedbank Africa Regions division comprises a presence across Namibia, Mozambique, Eswatini, Lesotho, and Zimbabwe, where the group owns and manages full-service banks.

Nedbank has said its focus in Africa in future will be on businesses it owns and controls. In the bank's recent interim results presentation, the executives admitted the investment in ETI did not materialise as expected. In particular, the Nigeria economy had not performed as expected and there had been regulatory uncertainty.

Nedbank CEO Mike Brown said in a statement: "Nedbank's decision to sell its ETI investment follows a detailed evaluation of the strategic alignment, financial performance and long-term value proposition of the investment and is consistent with Nedbank's ongoing efforts to optimise its capital allocation and focus on core growth areas."

The bank announced an organisational restructuring in March that included splitting its Retail and Business Banking (RBB) and Wealth clusters into more focused segments, and which became effective from July 1.

The group acquisition of the fintech company iKhoka Proprietary, which provides digital payment solutions to South Africa's small and medium business sector, became effective on December 1, this year.

Nedbank's share price traded 0.93% firmer to R264.65 on the JSE on Thursday morning, a price that was 6.4% lower than the R282.76 it traded at a year before.

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