The market cheered Sasfin Holding's R3.2 billion sale of its Capital Equipment Finance (CEF) and Commercial Property Finance (CPF) businesses to African Bank as it focuses on strengthening its core business.
The shares closed 40.02% higher at R31 on Friday and have increased by 24% in the past six months.
African Bank will purchase the CEF loan book; plus a R100 million in goodwill, while as regards the CPF business, African Bank will pay Sasfin the Agterskot Amounts “as and when they are realised”.
The deal must still be approved by shareholders in a general meeting.
If approved, the proceeds of the transaction will be redirected to the continued growth of the group's core businesses and enhancing total return for shareholders.
The group retains its Wealth, Rental Finance, and Focused Banking businesses.
Sasfin Holdings CEO Michael Sassoon said: “Over the past year Sasfin has undertaken a detailed strategic review of its business. Our strategy is to focus on our core businesses where we have strong capabilities and competitive advantages".
The strategic review also included an assessment of the economic, political and competitive landscape.
The board of directors was of the view that the company traded at a significant discount to the sum of its parts valuation due to the high costs of being a tier two bank and a number of sub-scale business units.
As a result Sasfin aims to become a more focused and streamlined business. This has resulted in the disposal of and entering into agreements to dispose of certain non-core assets, it said.
“The company is confident in the strength and scale of the Rental Finance and Wealth businesses, both in terms of financial strength and competitive positioning,” it said.
Sasfin, in its results for the six months to December 2022, released in March, said Sasfin Wealth delivered excellent results as it reported that its total income increased by 12.62% to R705.2 million, mainly due to strong loan book growth.
Sasfin is not alone in battling the significant discount to the sum of its parts valuation on the JSE.
Business Report reported last week that African Rainbow Capital Investments, majority owned by Ubuntu-Botho Investments with investments such as TymeBank and Rain in its portfolio, flagged in its annual report that it is not sure that remaining listed on the JSE remains in its best interests, despite it being on a robust growth trajectory.
It too is streamlining its business and disposing of some assets to try to reduce the discount value gap.
Sasfin said that the publication of Sasfin's annual financial statements for the year ending June 30, 2023 was further delayed, as the external audit had not yet been concluded.
Shareholders were advised that the trading update included in the Stock Exchange News announcement released on September 29 remained unchanged.
Sasfin expected to release its results by the end of the month.