Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, agreed to pay about $765 million for 60 percent of Standard Bank Group Ltd.’s markets unit to expand in commodities and currency trading.
Standard Bank, based in Johannesburg, is also granting ICBC a five-year option to acquire an additional 20 percent stake in the London-based business, according to a statement Wednesday. If it takes up that right, Standard Bank can require ICBC to buy the remaining shares within about five years.
The purchase will advance ICBC Chairman Jiang Jianqing’s target of tripling the contribution of overseas earnings to 10 percent by 2016 as the bank follows corporate clients expanding abroad and seeks to tap demand for yuan-denominated goods and services. Since 2007, ICBC has spent about $7 billion on more than 10 acquisitions from South Africa to the U.S.
The sale will also help Standard Bank, Africa’s largest lender, renew its focus on its home continent as it withdraws from other emerging markets . The lender has been selling assets outside Africa since 2011 to raise cash for expansion in the world’s fastest growing region after developing Asia .
The sale “will lead people to possibly re-evaluate their views on Standard Bank South Africa because there will be less drag from capital tied up in London,” Johann Scholtz, head of research at Afrifocus Securities Ltd. In Cape Town, said. “It’s obviously beneficial from a profitability point of view for Standard Bank and it removes uncertainty,”
Standard Bank said the purchase price of about $765 million is based on the unit’s net asset value of $1.41 billion at the end of June. The stock rose less than 0.1 percent to 122 rand as of 2:44 p.m. in Johannesburg and declined 5.7 percent this year.
ICBC bought a 20 percent stake in Standard Bank for $5.4 billion in 2007, making it China’s biggest overseas purchase at the time. In 2012, the Chinese lender acquired 80 percent of Standard Bank’s Argentine unit. Standard Bank earlier this month named former ICBC President Yang Kaisheng as deputy chairman.
