The transaction will see the leading French bank, grow its business in South Africa from corporate and investment banking to consumer credit. In 2011, it opened a representative corporate and investment banking office in South Africa and acquired 60% of Cadiz Securities for R150 million. The Personal Finance division is the specialist in providing financing for individual customers via its consumer credit and mortgage activities and is rated number one in France and Europe.
Thierry Laborde, CEO of BNP Paribas Personal Finance said the company "had seized the opportunity to expand its operations into South Africa. The transaction is in line with our international growth strategy. The potential for growth in South Africa combined with the quality of RCS management has given us great confidence to enter into the local market."
RCS, which was originally started by TFG, has been operating for many years independently from TFG and has grown into a diversified financial services business. It currently operates its own general-purpose credit card as well as private label and co-branded cards, and provides personal loans and insurance products in South Africa, Namibia and Botswana.
Peter Meiring, chairman of RCS, says the deal is extremely positive for all the parties as BNP Paribas Personal Finance will help realise the company's growth aspirations and ability to capitalise on a number of opportunities.
"RCS is a well-capitalised, well-managed and profitable company, with strong expertise in risk management that has shown consistent growth since inception. The move is a clear sign of confidence in South Africa."
The deal will also allow TFG to focus more closely on its core retail business and reduce its gearing and exposure to the unsecured lending market. At the same time, it will remove from its balance sheet a large portion of its debt that relates to RCS.
The group's share of the net proceeds is expected to be approximately R1.4 billion which it will utilise to optimise its balance sheet. At this stage, its intention is to utilise its proceeds for a general share repurchase. It will consider all alternatives, however and the ultimate use of the proceeds will depend on market conditions at the time.
Schalk van der Merwe, CEO of RCS, said, "The acquisition is a very positive step for the RCS Group. Both companies have a keen understanding of the retail consumer finance market with the many similarities in its operating models making for a very good strategic fit.
"We are looking forward to expanding the company's presence in the Southern African consumer finance market through the scale, expertise and financial support that BNP will bring as a shareholder. We envisage the transaction to be completed by the third quarter this year, subject to the normal conditions associated with a transaction of this nature such as regulatory approvals."
