Capitec grew rapidly on the back of unsecured loans available at branches. Picture: SUPPLIED
Capitec grew rapidly on the back of unsecured loans available at branches. Picture: SUPPLIED

Capitec, Nedbank and the Public Investment Corporation (PIC) are among local contenders that may pay up to R5bn for Mercantile Bank.

The Portuguese government announced on Friday that it had approved a shortlist of four potential buyers to participate in the second phase of the bank’s sale by state-owned banking group Caixa Geral de Depósitos.

The sale is a condition of a European Central Bank loan that required Caixa to reduce its foreign assets. It serves more than 12,000 entrepreneurs in SA.

It offers another opportunity for a new commercial bank in SA. There are two mutual banks — Bank Zero and YWBN — seeking licences.

The PIC has teamed up with Bayport Financial Services, a provider of personal loans and funeral insurance, to table an offer for Mercantile.

In the running

Also in the running is a consortium comprising business bank Grindrod and Arise, an investment company backed by Norwegian investment fund Norfund; Dutch development bank FMO; and Rabobank, a Dutch co-operative bank.

The shortlisted bidders were selected on factors including price, financial capacity and strategy, Mercantile said.

Capitec was keen to purchase Mercantile as it would give it quick entry into the small-business sector, which was inadequately served by banks, its chief financial officer, André du Plessis, said.

Nedbank CEO Mike Brown said it considered "niche, bolt-on acquisitions from time to time. We have not yet made any firm proposal, and any such proposal would have to pass muster with the competition authorities. Mercantile is relatively small and is unlikely to materially impact market shares."

The shortlisted bidders would be invited to conduct a due diligence on Mercantile, including a strategic engagement with the board and management. "Only after that session will we know why [the parties] want to buy us," said Mercantile CEO Karl Kumbier, who has not had sight of the purchase prices offered by the bidders. The parties would have eight weeks to put in a binding offer, he said.

Mercantile’s net asset value is on track to reach R2.5bn at the end of the year and banks generally sell for between one and two times their book value. It had assets of R13.4bn and deposits of R9.3bn at the end of December.

Net profit after tax has grown by double digits in each of the past three financial years.

Caixa would choose Mercantile’s buyer with input from advisers at its investment banking arm and Deutsche Bank SA’s corporate finance team, Kumbier said.

"Any one of these bidders would suit us," he said.

Caixa received 18 nonbinding offers, including from Bidvest Group, African Rainbow Capital, Sasfin and Numsa Investment Company.

Caixa and its advisers evaluated them and selected four bidders, which were then approved by the Portuguese government.