Exercise Of The Put Option Granted To The Group By ICBC Over The Group’s Residual 20% Shareholding In ICBCA
Standard Bank Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/017128/06)
JSE and A2X share code: SBK
NSX share code: SNB
(“Standard Bank Group” or “the group”)
ANNOUNCEMENT REGARDING THE EXERCISE OF THE PUT OPTION GRANTED TO THE
GROUP BY INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED OVER THE GROUP’S
RESIDUAL 20% SHAREHOLDING IN INDUSTRIAL AND COMMERCIAL BANK OF CHINA
(ARGENTINA) S.A. AND ITS AFFILIATES (“THE PROPOSED TRANSACTION”)
1. Background and salient terms
In November 2012, the group completed the disposal of a controlling
interest in each of Industrial and Commercial Bank of China
(Argentina) S.A. (previously Standard Bank Argentina S.A.), ICBC
Investments Argentina S.A. Sociedad Gerente de Fondos Comunes de
Inversión (previously Standard Investments S.A. Sociedad Gerente de
Fondos Comunes de Inversión) and Inversora Diagonal S.A. (collectively
“ICBCA”) to the Industrial and Commercial Bank of China Limited
(“ICBC”). The group retained a 20% shareholding in ICBCA, held by
Standard Bank Group’s wholly owned subsidiary, Standard Bank London
In the ICBCA shareholders’ agreement, ICBC granted a put option to
the group under which the group was given the right to sell all of
its remaining shareholding in ICBCA to ICBC, by giving notice at any
time between 1 December 2014 and 30 November 2019. The strike price
of the put option is fixed at USD180.751 million (approximately
R2.7 billion based on the exchange rate as at 6 August 2019).
In terms of the Listings Requirements of the JSE Limited ("the JSE")
("the Listings Requirements"), ICBC is considered a related party in
relation to Standard Bank Group.
2. Background on ICBCA
ICBCA is a leading universal banking operation in Argentina, offering
a comprehensive range of banking and other financial services to its
customers. ICBCA is highly profitable and well capitalised.
After the group’s 2011 strategy refocus on the African continent, the
group divested of control of ICBCA to ICBC in a transaction announced
on 5 August 2011.
ICBCA has performed strongly since the change of control from a
financial perspective. However, Argentina remains off strategy for
the group as a geography and there is little overlap in the client
bases of Standard Bank Group and ICBCA.
With the transition of control of ICBCA to ICBC an unqualified
success, Standard Bank Group considers that an exit from its
investment in ICBCA to realise capital for reinvestment into its
African strategy is appropriate.
4. Other salient financial information
Based on the unaudited financial information for the six months ended
30 June 2019, prepared under IFRS:
As at 30 June 2019, the group carried its associate shareholding in
ICBCA at a net asset value (“NAV”) of R1 579 million with the
investment contributing R432 million in profits attributable to the
group reported as headline and IFRS earnings for the six-month period
ended 30 June 2019.
For indicative purposes, at 30 June 2019, the accumulated debit
balance in relation to ICBCA to the group’s Foreign Currency
Translation Reserve (“FCTR”) was R2.9 billion.
Upon completion of the Proposed Transaction, the group would be
required to release the FCTR balance to earnings outside of headline
earnings. This movement between reserves will not impact the NAV of
The difference between the disposal price of the investment in ICBCA,
after applicable taxes, and the group’s carrying value in ICBCA would
be recognized as a gain outside of headline earnings. Based on
30 June 2019 IFRS values, this gain would be approximately
5. Independent fairness opinion
In terms of paragraph 10.7 of the Listings Requirements, the Proposed
Transaction is categorised as a small related party transaction.
Accordingly, the board of directors of Standard Bank Group (“Board”)
is required to provide the JSE with written confirmation from an
independent professional expert confirming that the terms of the
Proposed Transaction are fair insofar as shareholders of Standard
Bank Group (“Shareholders”) are concerned.
In compliance with paragraph 10.7(b) of the Listings Requirements,
JPMorgan Chase Bank, N.A., Johannesburg Branch ("J.P. Morgan") was
appointed by the Board as the independent professional expert and has
furnished an opinion to the Board confirming that the terms of the
Proposed Transaction are fair insofar as the Shareholders are
The opinion of J.P. Morgan will lie for inspection at Standard Bank
Group's registered office, 9th floor, 5 Simmonds Street,
Johannesburg, for a period of 28 days from the release of this
6. Exercise of the put option, conditions precedent and timing of
The Board has resolved to exercise the put option and to authorise
SBLH to give the requisite notice to ICBC.
The Proposed Transaction is subject to conditions precedent customary
to transactions of this nature, including regulatory approvals in
China and Argentina.
The completion date in respect of the Proposed Transaction is
anticipated to be in the last quarter of 2019 or first half of 2020.
The net proceeds of the Proposed Transaction will be received at the
date of completion. The group would seek to reinvest such proceeds to
support its African strategy.
8 August 2019
The Standard Bank of South Africa Limited
J.P. Morgan Equities South Africa Proprietary Limited
Simonis Storm Securities (Proprietary) Limited
Date: 08/08/2019 07:40:00
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