Why FirstRand is buying a UK bank
The Aldermore deal is about more than SA’s slow growth — it’s about SA’s largest bank outgrowing the country
Aldermore, a little-known British retail and business bank, became something of a household name among local investors last week after it emerged that SA’s largest bank by market value, FirstRand, is keen to drop R19.4bn to buy it. It’s a landscape-altering proposal — though it’s by no means a done deal. FirstRand is still in the throes of due diligence, but has until November 10 to make an offer or walk away. If the deal goes through, FirstRand will join a growing list of SA companies — Famous Brands, The Foschini Group and Truworths — that have deployed capital in foreign markets as SA’s growth stagnates. Last year, Rand Merchant Investment bought UK short-term insurer Hastings for R8bn — a stake now worth R9.9bn.This is probably why FirstRand has described Aldermore as "the ideal platform" from which to fulfil its UK expansion strategy on an "accelerated basis". The SA bank is clearly willing to pay for that platform too, offering 313p/share — a 38% premium to Aldermore’s average...
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