Mercantile Bank Shortlist

The Portuguese government has approved a shortlist of four potential buyers to participate in the second phase of the sale process of Mercantile Bank Holdings Limited (“Mercantile”). This approval allows the sale process of Mercantile by Caixa Geral de Depósitos, S.A. (“CGD”), a Portuguese State-owned banking and financial services group, to progress to the next phase.

CGD has received 18 non-binding offers for Mercantile, the bank controlling company and sole shareholder of Mercantile Bank Limited (“Mercantile Bank”), a niche business and commercial bank which specializes in serving entrepreneurs. CGD announced its intention to sell Mercantile last year as part of a strategic plan approved by the European Commission, requiring CGD to reduce its foreign assets. Mercantile is 100% owned by CGD.

Pursuant to the recommendation of CGD, the Portuguese Government approved the shortlist of potential buyers after a thorough evaluation process by CGD and its advisors of the non-binding offers received.

The following potential buyers were selected based on the criteria set out in the Portuguese Decree-Law No. 153/2017 of 28 December 2017 which approved the sale process. The criteria included – amongst others – price, financial capacity, and strategy.

A consortium comprising Arise B.V. and Grindrod Bank Limited. Arise is an African investment company backed by the following shareholders: Norfund, a Norwegian investment fund for developing countries; FMO, a Dutch development bank; and Rabobank, a Dutch cooperative bank.
Capitec Bank Limited. Capitec is South Africa’s largest retail bank based on the number of customers who use it as their main bank. It has a market capitalisation of over R101 billion and PSG Group as its largest shareholder.
Nedbank Group Limited. Nedbank is the fourth largest bank in South Africa, ranked by assets. It has a market capitalisation of over R140 billion with Old Mutual plc as its majority shareholder.
A consortium comprising Public Investment Corporation SOC Limited (“PIC”) and Bayport Financial Services (Pty) Limited. The PIC is Africa’s largest asset manager, managing public sector funds in excess of R1.9 trillion. Bayport Financial Services is one of the largest non-bank providers of unsecured credit and allied products in South Africa.

These approved potential buyers will now be allowed to conduct a due diligence process on Mercantile, including a full-day strategic engagement with Mercantile’s Board and management. This will be followed by the submission of binding offers. The entire process is expected to be finalised by the end of 2018, with the final approval by the Portuguese Government and with the completion being subject to South African regulatory approvals.

Karl Kumbier, CEO of Mercantile, says Mercantile is pleased by the quality of the potential buyers on the list. “I believe interest in Mercantile from companies of this calibre is not only testament to the quality of our business, but also of our team. It is their hard work and commitment which has underpinned our success and strong growth trajectory over the past 5 years. I am excited that each of these potential buyers could open up new opportunities for Mercantile and add great value to our business, just as we can add great value to theirs.”

He adds it is also an encouraging sign for the South African economy to see a foreign corporation member of a consortium selected as one of the final four potential buyers. “It is very positive for South Africa to see foreign players willing to make a long-term investment here. Their interest in Mercantile not only shows that they believe in the growth potential of our business, but also in the potential of the South African entrepreneurs we serve.”

Mercantile’s latest financial results for the year ending 31 December 2017 saw its net profit after tax climb by 20% to R213 million. This follows growth in net profit after tax of 21% in 2016 and 15% in 2015. Mercantile’s assets grew by 9% in 2017 to R13.4bn and deposits grew by 10% to R9.3bn.