Nume Ekeghe with agency report
FirstRand Limited, a South African bank and the leading lender by market value on the continent, plans to buy assets in Nigerian, as it seeks to capitalise on the global fall in commodity prices that has pushed down asset valuation in Africa’s biggest economy.
The plan comes five years after the lender decided against buying majority shares in Sterling Bank Plc because of high prices in shares.
Naira, the national currency fell to a record low of N309 against the dollar, in July further lowering asset valuation in the nation.
“Asset prices in jurisdictions such as Nigeria have become much more realistic. We feel more comfortable to look for opportunities to deploy shareholder capital for acquisitions to assist us in scaling our operations,” Reuters quoted the bank’s chairman, Laurie Dippenaar to have said in the annual report published on its website on Tuesday.
FirstRand Limited’s decision is likely to help the nation’s struggling economy.
Aliko Dangote, who is the richest man in Africa, recently advised the government to sell some of its assets to boost the economy.
FirstRand Limited has operations in nine African countries. The bank sought to expand in developed countries after the slump in commodity prices in several African countries like Zambia and Nigeria, where it has operations, Bloomberg reported.
The lender is also eyeing Kenya, the biggest economy in East Africa. FirstRand Limited revealed initial plans to buy a bank in the country four years ago.
“The banking sector in the East African nation is considered ripe for investors by market analysts. The quality of assets is likely to improve in the wake of new regulations such as the capping of interest rates,” Cytonn, an investment firm stated. “The sector is now attractive to both investors and clients,” the firm added.
FirstRand Limited’s decision to seek expansion in Nigeria and Kenya has been attributed mainly to the volatile environment in South Africa, where investor confidence is slow, since former Finance Minister, Nhlanhla Nene, was fired in December last year.
Pravin Gordhan, the current minister is also locked in battles with the police and this has further dented investor confidence in Africa’s second biggest economy.
The South African lender set aside $294 million for expansion across Africa, three years ago.