Johannesburg - European personal loan firm BNP Paribas Personal Finance had acquired The Foschini Group’s consumer finance business, RCS, for about R2.65 billion, the fashion retailer said yesterday.
BNP Paribas Personal Finance is a subsidiary of BNP Paribas, a French bank that is one of the largest in the world.
Foschini owned 55 percent of RCS, with the remaining 45 percent of the business owned by Standard Bank. It 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.
RCS has more than 1 million cardholders and services a network of more than 18 000 retail outlets including Game, DionWired, Makro, Pick n Pay, Shoprite and Clicks.
A retail analyst said the deal would give Foschini a chance to focus on its core business.
Foschini agreed, saying it would be freed up to attend more closely to fashion retail fundamentals while reducing 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 which relates to RCS,” it said.
Foschini’s share of the net proceeds was expected to be about R1.4bn, which it would use to optimise its balance sheet.
RCS chairman Peter Meiring said the deal was extremely positive for all parties as the BNP Paribas unit would help realise RCS’s growth aspirations and enable it to capitalise on a number of opportunities. He added that the move by the French bank was a clear sign of confidence in South Africa.
The transaction was expected to be completed by the third quarter this year.
Evan Walker, a portfolio manager at 36One Asset Management, said Foschini and Standard Bank had indicated that RCS was not part of their core business. “Standard Bank does not want to play in the unsecured lending business and Foschini has said it will prefer to do other things with its capital rather than run an unsecured book like RCS.”
He said the deal would help Foschini move forward and focus on the core business.
Thierry Laborde, the chief executive 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 the market.”
Walker said BNP Paribas Personal Finance was predominately looking to expand into new markets and it was interesting that Steinhoff was its biggest customer in Europe.
“What has been speculated is that it needs to buy critical mass, which is what it is going to be buying from RCS, and take over other books, including JD Group’s, in future.”
Foschini gained 3.12 percent to R109.04 on the JSE yesterday. - Business Report