Bidvest Buys FinGlobal to Expand Financial Services UnitBy
Parent company seeks large acquisitions to build new business
Lender aims to take market share from South African banks
A unit of Bidvest Group Ltd. agreed to buy FinGlobal, a provider of financial services to South Africans living outside the country, as part of an acquisition drive to expand and diversify its business.
Bidvest Financial Services will fund the purchase out of its 2 billion rand ($142 million) in cash reserves, Managing Director Japie van Niekerk said by phone on Tuesday, without disclosing the value of the deal. The acquisition gives the division access to Hermanus, South Africa-based FinGlobal’s more than 15,000 customers in 80 countries, offering services such as tax refunds, foreign-exchange services and retirement annuities.
The transaction marks Bidvest Financial Services’ second deal in three months after buying First Data Corp.’s South African e-commerce payment unit, First Data Resources, through its banking unit for an undisclosed sum in August. Bidvest Financial Services is seeking to broaden its customer base in an effort to take market share from South Africa’s four largest lenders.
“We are looking to add and diversify our revenue streams,” Van Niekerk said. “We also have the ability to do one or two bigger acquisitions with the group.”
The company’s parent is looking for its next phase of growth after spinning off its food-services unit last year, with all businesses in Bidvest looking for large strategic acquisitions to bolster the group’s portfolio, he said. Bidvest has as much as $1 billion to spend on acquisitions, Chief Executive Officer Lindsay Ralphs said earlier this year.
Bidvest rose 0.1 percent to 187.77 rand, extending gains over the past six months to 16 percent, and valuing the company at 63 billion rand.
Moody’s Investors Service in June upgraded Bidvest Bank’s long-term national scale rating to Aa2 even as South Africa’s local-currency debt faces the risk of a downgrade to junk by the end of this year due to the country’s slow economic growth, climbing debt levels and political wrangling. Bidvest Bank, which is a division within Bidvest Financial Services, was born out of a foreign-exchange company Bidvest bought in 1998.
“There is some risk in terms of the sovereign rating, but usually in tough economic operating environments there are also opportunities,” said Van Niekerk.
(An earlier version of this story was corrected to show that Bidvest Financial Services is making the acquisition and not Bidvest Bank.)