Absa sells its stake in Edcon store card portfolio to the RCS Group
DURBAN – Absa Bank has sold its stake in the Edcon store card portfolio to microlender RCS Group, a subsidiary of BNP Paribas Personal Finance, for an undisclosed amount as it focuses on core assets.
RCS said yesterday that it had entered into commercial agreements with Edcon, inclusive of credit cards, store cards and personal loans.
RCS said the transaction purchase consideration would be settled by a combination of internal cash resources and funding to be provided by Rand Merchant Bank, a division of FirstRand Bank and The Standard Bank of South Africa.
RCS serves more than 1.2 million customers in South Africa, Namibia and Botswana and has an established book value of R10 billion.
The transaction, which is subject to regulatory approvals, includes the sale of Edcon’s store card debtors’ books in both South African and Namibia.
Arrie Rautenbach, the chief executive of Absa Retail and Business Bank, said yesterday that the sale was positive for Absa as it would free up capital and management time to focus on executing against the strategy that Absa announced last year.
“In terms of the strategy, our priority is to regain our leadership in core areas,” Rautenbach said.
Absa, previously known as Barclays Africa Group, last year reiterated its goal to double its share of banking revenues in Africa to 12 percent.
Absa acquired the debtor’s book for about R10bn in 2012 after Edcon sold it as the troubled retailer – the owner of Edgars, CNA and Jet – for the rights to provide consumer finance products to Edcon customers – tried to reduce its large debt burden.
In March, Edcon secured a R2.7bn deal with lenders, landlords and the Public Investment Corporation as part of its restructuring plan to save the group.
Grant Pattison, the chief executive of Edcon, said partnering with RCS would not only grow Edcon’s credit business and customer base, but it would also offer their customers a more diverse and dynamic set of consumer finance solutions.
“Edcon, in working together with RCS aims to take the lead in customer service and credit management, retaining ownership of the customer journey and improving our customer’s omnichannel experience. Our top priority is to ensure the accelerated growth of credit sales, which is key to Edcon’s turnaround plan. We look forward to strong growth in this next and promising chapter of Edcon,” Pattison said.
RCS said the transaction cemented its position as the pre-eminent provider of outsourced credit solutions in the region, providing an indication to the market that BNP Paribas Personal Finance was committed to South Africa.
Regan Adams, the chief executive of RCS, said by becoming the preferred provider of financial solutions to one of the largest non-food retailers in South Africa had always been an ambition of RCS.
“This deal significantly strengthens our position as the leading provider of retail consumer finance products and provides the company with the opportunity to grow for the benefit of our shareholders, our people and our customers,” Adams said.