South Africa - Too many banks, too few deals
|Headline: South Africa - Too many banks, too few deals
Date: March 2000
Author: Richard Stovin-Bradford
South Africa's largest companies have switched to using international investment banking advisers. Now local South African merchant banks, many set up in recent years by entrepreneurs, find themselves forced into a frenzy of mergers and acquisitions to fight off these foreign entrants into their market. Richard Stovin-Bradford reports
Until the early nineties, the investment banking business in South Africa was divided between established local names such as FirstCorp, the former merchant banking arm of First National Bank (FNB), Standard Merchant Bank, UAL Merchant Bank, Rand Merchant Bank, Investec, the Board of Executors (BoE) and a host of stockbrokers.
Few members of this cozy coterie anticipated the shakedown they would witness when South Africa was suddenly reintroduced to the global community following the country's first free elections in 1994. Hot on the heels of these elections came an invasion of foreign investment banks. They quickly snapped up local stockbrokers or formed alliances that were often precursors to outright acquisitions.
Alan Hartdegen, banking analyst at ING Barings Southern Africa, says: "Local banks used to dominate top-tier corporate advisory work until the leading international banks arrived with their massive balance sheets, strong brands, global distribution and research capabilities and bundled the locals out of this segment."