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FirstRand Ltd., Africa’s biggest bank by market value, said it’s considering acquisitions in Nigeria where the slide in oil prices and a devalued Naira has undercut asset prices.
FirstRand walked away from buying control of Lagos-based Sterling Bank Plc in 2011 because the asking price was too high.
“Asset prices in jurisdictions such as Nigeria have recently become much more realistic,” Chairman Laurie Dippenaar said in the Johannesburg-based company’s annual report, published on FirstRand’s website on Tuesday.
“We feel more comfortable to look for opportunities to deploy shareholder capital for acquisitions to assist us in scaling up our operations. FirstRand remains committed to growing outside of South Africa.”
Read also:https://businessday.ng/companies/article/firstrand-to-cut-lending-in-african-operations/
The South African bank’s investment-banking unit is already operating in Nigeria, and in 2012, FirstRand said it was looking for an acquisition to help fund Rand Merchant Bank’s operations in the West African nation.
It’s only now that Nigeria’s naira has been devalued and banks’ bad-debt levels are soaring as that economy slows that asset prices have declined.
While FirstRand “will remain disciplined and definitely not squander shareholders’ capital on seemingly cheap earnings,” it sees the rest of Africa as a long-term growth opportunity, Dippenaar said.
The lender is “very focused on creating more of a portfolio effect to reduce concentrations and diversify risk.”
FirstRand pared an earlier gain of as much as 2.1 percent to close 1.2 percent up at 47.55 rand in Johannesburg on Tuesday.
FirstRand has also expressed interest in expanding in Kenya. In January Chief Executive Officer Johan Burger described the East African nation as a key market and said the company had to find a solution to its dilemma between pursuing organic or acquisitive growth in that country this year.
Kenya and Nigeria are growing faster than South Africa where there was “a fundamental downward shift in international investor confidence” after President Jacob Zuma fired former Finance Minister Nhlanhla Nene without warning last December.
