Rental market offering taken to a new level
Sasfin Bank’s recent acquisition of Fintech promises to be a major boost for Sasfin in the rental market in the period ahead. The R156m deal has received Reser ve Bank a nd Competition Commission approval.
Sasf in provides rental, lease and instalment sale agreement services, particularly in the f inancing of office automation, and related equipment such as copiers, security, information and communication technology as well as capital equipment. This is generally referred to as the ‘rental market’. Fintech operates in the same market with more than 10 000 commercial and corporate customers.
Sasf i n’s Business Banking division offers equipment f inance as well as trade and debtor f inance and is one of Sasfin’s most successful divisions.
Says Linda Fröhlich, head of t he group’s Busi ne s s Bank i ng division: “The main driver is that Fintech will provide us with an opportunity to strengthen our position in the market and deploy our capital more effectively.
“We anticipate good, solid, consistent growth during the next three to f ive years in spite of the current tr ying conditions experienced in the South African economy.”
Three or f our y e a r s a go, s he e x pl a i ns, i t had a l r eady become apparent that Sasf in needed a game changer, and in spite of scouring the market for opportunities, it failed to f ind a suitable partner.
Then t he Fintech opportunit y presented itself. The company operates in the same fields, has similar business models, boasts excellent management a nd comparable c u l t ures a nd is comfortably geared to the onerous regulatory requirements of the securitised space.
The Sasfin securitisation vehicle, the oldest in South Africa, was launched in 1991 and has grown from strength to strength since then. Ten years ago Sasfin’s book stood at R300m and today is R3.4bn, with Fintech taking it to over R4bn. Other big attractions that the deal has brought to Sasf in, s ay s Fröhl i c h, is that Fintech is “lean and mean” and has t wo major clients, By t e s a nd Ricoh S A, e nt r e n c h e d on i t s pl a t f or m. Consequently, it s operations are spread across the country.
Sasfin and Fintech will look to boost ef f ic i encies through the deal and will begin to operate under one brand in the near future. Glen Christopulo, Fintech CEO and a former shareholder, will continue his employment with the group.
“Their service levels are good, so are ours; their credit is very similar to ours; and there isn’t a huge overlap in our businesses. They have similar products, similar offerings, but we play in different arenas,” he explains.
Fröhlich says that Fintech’s major rationale for the acquisition was that it needed a partner to help grow its business. “And that’s what we do. We partner with you, get to understand your
Head of Business Banking at Sasfin business, and help you grow to create wealth. A time, in fact, comes when smaller businesses need a bigger brother. And apart from all the other synergies, our reputation and balance sheet will allow Fintech considerably more operationa l and market l at it ude. Previously they could do deals of, say, a maximum R8m – now they have the platform to engage in much bigger deals.”
Fröhlich says that i ronically her division’s last major growth phase was when f inancial markets collapsed in 2008. “Most banks saw fit to tighten up, and we believed that we were well placed to move into that space with our more conservative credit and slightly higher rates. Though the margins between us and them were small, we compensated with our very strong service ethic.
“People are people and they need a bit more love when things are difficult, and we played strongly to that. Your bank is your bank, but if it stands by you and helps you when you most need it, it takes the relationship to another level,” she says.
WILL LOOK TO BOOST EFFICIENCIES THROUGH THE DEAL
AND WILL BEGIN TO OPERATE UNDER ONE BRAND IN THE