Saturday, July 07, 2007

Stanbic,CFC and the Budget

The past month has been very interesting in the financial world
CFC Stanbic Merger
The mechanics of this merger are in two parts:

1.CFC Holdings will take over Standard Bank of South Africa's stake(Stanbank-SA stake in Stanbic-Kenya is held through Stanbic-Africa Holdings ltd) in Stanbic Bank Kenya in Exchange for CFC Holdings shares.Simply put CFC will give Standard Bank-SA shares in the entire CFC group(CFC holdings) and get the former's shares in Stanbic Bank Kenya

2.Gambit holdings(45% stake in CFC holdings) will sell their shares in CFC Holdings to Standard Bank-SA through Stanbic Africa Holdings Ltd.

The net effect of the two transactions are that Standard Bank-SA will end up with 60% of CFC Stanbic Holdings ltd shareholding

Who has bought whom?
This deal has confused many.The facts are:
-CFC Holdings has acquired Stanbic Bank Kenya ltd.
-CFC Holdings has been acquired by Standard Bank Group of South Africa

Why does CFC Holdings want a CMA exemption?
CFC Holdings wants a Capital Markets Authority exemption because the deal seems to disadvantage the minority shareholders i.e. while Gambit holdings gets to sell its stake in CFC Holdings to Standard Bank Group.
The minority shareholders dont get this option.They can only remain with their shares in the CFC Holdings group or sell them through the market and NOT to Standard Bank if they do not like the deal.

The other merger option
The deal could also be structured in the manner TPS used to consolidate its East african operations under one group.In this case a new company would be formed and it would take over the entire assets of CFC Holdings+Stanbic Bank of Kenya.Then Shareholders of CFC Holdings would exchange their share in CFC holdings for shares in the new group.Likewise to holders of Stanbic Bank of Kenya.

The Budget
Did anyone notice the proposed amendment in the retirement laws that exempted a deceased persons retirement benefits from his/her estate?
This amendment means that if name your girlfriend as your retirement benefits beneficiary and not your wife and children.In the event of your untimely demise, the scheme trustees can pay your pension benefits to your girlfriend and your Wife/children cannot dispute it in a court of law.

Am sure in a few months this law will bring some interesting situations to light.Unless retirement scheme trustees amend the laws on nominating nominees and state who u can or cant nominate as a nominee.


MainaT said...

Pesa-my understanding of the deal is a little different from yours. CFC Holdings (which will now include Stanbic Kenya) will be the listed company. As such, all current shareholders will hold shares in this larger group. If its otherwise, I can't see how CMA will allow the deal and even if they do, minority shareholders will take CFC to court

ka-investor said...

pesa tu: thanx for the explation. welcome back.

mwasjd said...

For me, the important bit is what will happen to my bank account. Stanbic of late has introduced new products, and is unfortunately forcefully moving clients from their former portfolios to new ones.
Example is their plus plan account which has been modified to only 2 withdrawals per month!!!
Saw a customer raise moto in the main branch last week. I wonder if there's room for legal recourse...

pesa tu said...

@Mainat: its otherwise,Gambit get to sell their shares in CFC holdings to Stanbic Africa but the minority shareholders dont get the same privilege.If they have to flog their shares they must do it through the NSE to other ordinary Joes.

@Ka-investor: hope it was helpful

pesa tu said...

@mwasjd: No room for legal recourse Barclays did the same thing to me a while back.Once u sign the Account opening agmt, u give them the right to alter terms,conditions and fees