Discovery launches its bank this week
Competition in the banking sector is set to heat up as new players enter the market
Discovery will finally launch its bank on Wednesday, having cleared half of the hurdle that delayed the health insurer's entry into the banking space in the last quarter. On Friday, Discovery announced that it had managed to raise the R1.85bn it needed to buy out FirstRand in an accelerated bookbuild that was fully subscribed in less than 24 hours. The company will issue more than 11-million new ordinary shares to qualifying investors when it launches the bank for R162 per share, a price that represents a 2% premium to Discovery's average share price in the past month. "It's a fairly good price given that their share has been volatile this year, in line with the market. But fundamentally Discovery's financial results were better than most of their peers," said Warwick Bam, head of research at Avior Capital Markets. Bam said Discovery had the advantage of being a credible competitor because while it is new in the transactional banking space, it has had a credit card offering for some...
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