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JD Group to sell finance unit‚ market speculates over buyer

5 Sep 2014

JD Group (JDG)‚ a subsidiary of furniture manufacturer and retailer Steinhoff (SHF)‚ earlier this week said that it intended to sell its finance unit to an international consumer finance group‚ adding that the deal‚ which did not include its insurance operations‚ had yet to be finalised.

Shares in the company surged more than 4% in early trade on Tuesday while Steinhoff saw its share price dip by nearly 5%.

A local asset manager speculated that the group interested in buying the finance unit could be France's largest bank‚ BNP Paribas.

Earlier this year the bank said South Africa's consumer credit market was well regulated.

"The largest underwriters in this field have ... reduced their risk appetite as early as the beginning of 2013 and the overall market has shown recovery signs since then‚" it said.

Following those remarks‚ it acquired the private label Retail Card Solutions (RCS) joint venture of the Foschini Group (TFG) and Standard Bank (SBK) for a total consideration of R2.46bn.

RCS's total loan book is close to R5bn.

"BNP is already operating here and they are looking to grow their book. They have previously said that they want to expand more into our market. JD's finance unit is pretty sizeable and I think they will be looking to grow that. Plus‚ Steinhoff is BNP Paribas's biggest customer in Europe.

"The deal makes sense because all the players know each other. It does seem like a good fit‚" the local asset manager said.

JD Group on Monday said it expected a full-year headline loss per share of between 550c and 570c from earnings of 395c per share in the year-earlier period.

Steinhoff said it expected headline earnings per share from continuing operations for the year ended June 30 to increase by 25%-30% to 359c. It said adjusted headline earnings are expected to lift 25%-30% to 376c.

At 1.21pm Steinhoff was down 5.36% to R50.34‚ valuing the company at about R123.73bn.

JD Group was up 4.19%% to R23.39‚ valuing the company at about R6.3bn.

Source: Business Day

Source: I-Net Bridge

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