African Bank's Stangen Acquisition Fails as Agreement Lapsesby
Start of revived `good bank' still on track for February
Lender will establish an alternative insurance provider
The lending unit of African Bank Investments Ltd., which collapsed in August last year, said it’s no longer buying insurer Standard & General Insurance Co. from its parent after the deal was delayed.
African Bank will instead establish an alternative insurance provider and is still on track to start operating as a new banking entity in February 2016, the Johannesburg-based lender said Friday in a statement. African Bank won’t need to set up a separate company or acquire one to be able to offer customers these services, it said later in an e-mailed response to questions.
Last month, black South African shareholders in Abil, as the bank’s parent company is known, filed an urgent application to the Pretoria High Court to stop the sale of Stangen to African Bank for 1.38 billion rand ($105 million), saying the selling price was too low and there may have been a conflict of interest when the deal was designed. African Bank tried to oppose the court application, but was unsuccessful and a meeting to approve the Stangen sale had to be postponed.
“I do not consider myself to be conflicted,” Tom Winterboer, the administrator of African Bank who arranged the Stangen deal, said on Sept. 29. The price was fair and fell within the valuation range given by independent auditors, he said, adding that none of Abil’s shareholders had been included in the discussions and negotiations regarding the rescue of African Bank.
Further details on who will fund and run the new insurance operations will be available on African Bank’s website next week, the lender said in Friday’s e-mail. “The detailed impact on the financial projections will be shown” in these documents, it said. The changes to its plans aren’t expected “to have any material impact on the previously disclosed financial projections,” it said.