Companies / 5 November 2018, 07:50am / Kabelo Khumalo
JOHANNESBURG – Billionaire Patrice Motsepe’s ambitions to own a bank got a shot in the arm on Friday after his investment vehicle, African Rainbow Capital Investment (ARCI), received the green light by Prudential Authority to acquire a majority stake in TymeBank.
The authority, housed in the SA Reserve decision, meant the digital bank was ready to launch. The bank, which was previously referred to as TymeDigital, was majority owned by Commonwealth Bank Group.
ARCI, which is controlled by ARC, said it had now met all necessary regulatory approvals for the acquisition.
This included approval from the Competition Commission, which gave the deal a nod without conditions attached to the transaction.
“The acquisition is to be effected through ARC’s 50.1percent held subsidiary, ARC Financial Holding Company (FinHoldCo), following which FinHoldCo will become the 100percent owner of TymeDigital,” ARC said.
“The ARC Fund, an en commandite partnership in which ARCI is a limited partner, holds 49.9percent of FinHoldCo.”
The central bank last year granted Tyme a banking operating licence. ARCi is 100percent owned by Ubuntu-Botho Investments (UBI), of which Motsepe is an anchor shareholder. He serves as both chairperson of UBI and ARC. ARCI first announced its intention to acquire the 90percent it did not already own in TymeBank in August.
The bank currently offers a domestic money remittance product, known as MoneyTransfer, in partnership with Pick * Pay and Boxer, with nearly 400000 customers using the platform.
TymeBank chief executive Sandile Shabalala said the bank was set to launch to the broader public before year-end.
“We just came out of a pilot with our staff and everything is working and we are looking good to launch still this year,” Shabalala said.
“We will be lending to the consumer segment and we will also lend to the small businesses segment. However, the market will go with the consumer segment first and then the small business segment will follow later.”
Capitec, the last bank to significantly disrupt and take market share from the big four banks, in September said it was looking to venture into business banking.
To achieve this, Capitec, which said it attracted 110000 new clients for the six months ended August, is pursuing the acquisition of Mercantile Bank.
Technology savvy players are set to rock South Africa’s banking sector in the next few years, chief among them Discovery Bank, which is set to launch soon, while Bank Zero, backed by former FNB chief executive Michael Jordaan, is also readying itself to launch.
The new entrants come at a time that the country is staring at a credit downgrade by rating agency Moody’s after a poorly received Medium Term Budget Policy Statement last month.
A downgrade by Moody’s would result in the country being excluded from Citi’s World Government Bond Index and see a potential outflow of $5billion (R71.35bn) from the economy.
Asief Mohamed, a chief investment officer at Aeon Asset Management, said: “For TymeBank to succeed, it needs to offer a compelling loan proposition to the consumers.”
The regulator’s approval came the same week Motsepe increased his stake in a diversified financial service group, Sanlam, via UBI, making the firm the single largest shareholder in Sanlam.
Arci listed on the JSE last year and has shown an appetite in investing in financial services companies. Its financial services include investments in Alexander Forbes, Indwe Broker Holding, Sinayo Securities, stock exchange A2X and Santam.