| Wed 3 Nov 2004, 13:13 | | SASFIN BUILDS R100m "WAR CHEST" |
|
SASFIN BUILDS R100m `WAR CHEST` THROUGH PREFERENCE SHARE ISSUE
SASFIN HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration number 1987/002097/06
(`Sasfin Holdings` or `the company`)
Share code: SFN ISIN ZAE000006565
Share code: SFNP ISIN ZAE000060273
Specialist banking group Sasfin will raise R100 million through the issue of
preference shares later this month, lifting its capital adequacy ratio from 26%
to 37% - well above the industry norm.
Sasfin CEO Roland Sassoon says a pleasing aspect of the preference share issue
is that all the preparation work will have been done in-house and the funds will
be raised entirely from the bank`s private client base - a resounding vote of
confidence in the bank`s performance.
The preference shares will be listed on the `Specialist Securities - Preference
Shares` board of the JSE Securities Exchange SA on 17 November, 2004.
Says Sassoon: `This issue exercise will have been done entirely in-house. The
pre-listing statement was prepared by our corporate finance division and placed
by our stock broking division with our private clients. This issue creates a war
chest for further growth and development, whether organic or by acquisition.`
The preference shares will attract dividends equal to 75% of the prevailing
prime lending rate, payable semi-annually. These are variable rate, non-
cumulative, non-participating, non-redeemable preference shares. They do not
carry voting rights, nor are they convertible into ordinary shares.
A total of one million preference shares will be issued at a subscription price
of R100 per share. Irrevocable commitments have been received from selected
investors to take up all one million shares, which means the bank has raised the
full R100 million allotment.
Sassoon says the issue must be seen in the context of banking consolidation
worldwide, where products and services are increasingly commoditised. `As the
world becomes a global village it will be dominated by fewer players in each
industry. As the big players fight it out for the mass markets, the niche areas
will grow.`
The process of consolidation currently underway in banking will continue, and
the survivors will be those able to capture the largest market share in order to
derive economies of scale, minimise price and maximise speed of delivery. `Thus
there will be little room for personal service for the entrepreneur, which will
be left to the niche players,` says Sassoon.
As lender and financial service provider to the entrepreneur, Sasfin occupies a
unique place in the South African banking sector. The mega-banks will be driven
by the quest for volumes, and that limits their ability to offer the kind of
personalised, intimate banking relationship that Sasfin provides.
`This war chest allows us to expand within our target market to become the
banker and financial services provider of choice for the entrepreneur.`
Sassoon adds that barriers to entry in banking have become extremely onerous in
recent years, especially since the recent small banking crisis. Elevated
corporate governance requirements present a formidable obstacle to new entrants,
and the regulators have become more selective in issuing new banking licences.
It also takes many years to develop the necessary lending skills to succeed in
this sector. Sasfin has demonstrated its ability to survive the most trying
conditions through a judicious approach to both deposit taking and lending.
Sasfin`s atttributable earnings nearly trebled to R60 million for the year ended
30 June 2004, while headline earnings per share increased 185% to 236,5c.
Return on equity was 30.6% and on assets 4.6% and its share price has almost
trebled in the past 12 months.
Sassoon says these results demonstrate the strength of the bank`s business model
and the fact that it is not short of growth opportunities.
Based on its 1987 listing price of 60 cents per share and closing share price at
31 October 2004 of 1630 cents, together with dividends paid during the period,
Sasfin Holdings has achieved a compound annual return for shareholders of 31,6%.
Ends
ISSUED FOR : SASFIN HOLDINGS LIMITED
CONTACT : Roland Sassoon Tel: 011 809 7778 Cell 082 570
6051
FAX NO : 011 887 6167
E-MAIL : rsassoon@sasfin..com
WEBSITE : www.sasfin.com
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart 011 325 4195 Cell: 082 443 6399
FAX NO : 011 325 4199
E-MAIL : tish@tspr.co.za
DATE : 3 November 2004
