FirstRand Eyes Acquisitions in Nigeria as Valuations Ease

  • FirstRand remains committed to growing outside of South Africa
  • Chairman pledges to remain disciplined, won’t ‘squander’ cash

FirstRand Ltd., Africa’s biggest bank by value, said it’s considering acquisitions in African countries like Nigeria because prices have eased in the wake of plummeting commodity prices and weakening currencies.

“Asset prices in jurisdictions such as Nigeria have recently become much more realistic,” Chairman Laurie Dippenaar said in the Johannesburg-based company’s annual report, published on FirstRand’s website on Tuesday. “We feel more comfortable to look for opportunities to deploy shareholder capital for acquisitions to assist us in scaling up our operations. FirstRand remains committed to growing outside of South Africa on the back of a strategy that is both organic and acquisitive.”

FirstRand walked away from buying control of Lagos-based Sterling Bank Plc in 2011 after it was unwilling to meet the sellers’ price demands. The lender’s investment-banking unit is already operating in Nigeria and in 2012, FirstRand said it was looking for an acquisition to help fund Rand Merchant Bank’s operations in the West African nation. It’s only now that Nigeria’s naira has been devalued and banks’ bad-debt levels are soaring as that economy slows, that asset prices have declined.

While FirstRand “will remain disciplined and definitely not squander shareholders’ capital on seemingly cheap earnings,” it sees the rest of Africa as a long-term growth opportunity, Dippenaar said. The lender is “very focused on creating more of a portfolio effect to reduce concentrations and diversify risk,” he said.

FirstRand pared an earlier gain of as much as 2.1 percent to close 1.2 percent up at 47.55 rand in Johannesburg. That was the smallest increase on the six-member FTSE/JSE Africa Banks Index, which climbed 1.9 percent with Barclays Africa Group Ltd. leading the measure.

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