Go-ahead for early stage of African Bank’s IPO
African Bank said on Wednesday that it had obtained shareholder approval for the implementation of its employee share ownership scheme.
This is part of a first phase of preparations for an initial public offering (IPO) for the group.
The company said in November that the first phase in the preparation for the IPO entailed the design and development of an employee share ownership scheme, the development of a management scheme and the sourcing of appropriate strategically aligned partners.
In anticipation of the IPO, the bank intends to implement a broad-based employee share ownership scheme to align employee and shareholder interests, allowing employees to participate in the value created post the IPO and to support the attraction and retention initiatives of the bank, it said.
The share trust would hold no more than 10% of the ordinary shareholding of African Bank Holdings Limited after the issue of shares. Each eligible employee would receive an equal allocation.
At an extraordinary general meeting on March 26, shareholders voted in favour of the necessary resolutions to implement the employee share ownership scheme.
The group will release further details of the scheme in the half-year results to be released in May.
“We are on the cusp of a significant milestone, one that honours the rich heritage of African Bank. We look forward to the moment where our bank for the people, by the people, serving the people, will one day also be owned by the people,” said CEO Kennedy Bungane.
“Our broad-based employee share ownership scheme is a stepping stone in achieving that vision and will ensure that the people have a say in the bank that was created for them. It represents another important step in our Excelerate25 strategic journey as we continue building a customer centric, data and digitally enabled [bank].”
The bank, due to list on the JSE in 2025, appointed former Old Mutual executive David O’Brien to its board in 2023 in a move expected to boost the board’s digital and technology expertise. In recent months, the lender has been making changes to its board as it prepares to take the company public in the next two years. One of the key drivers for changes at board level is to do away with the identical composition of African Bank’s and African Bank Holdings Limited’s boards, which it said brought “unintended legal repercussions when certain shareholder resolutions were required to be passed by the ABL shareholder”.
African Bank Holdings is the holding company, 50% owned by the Reserve Bank, while a consortium of five SA banks holds the other 25% on a prorata basis. The Government Employees Pension Fund owns the other 25%.
The ownership structure of the holding company came about after the near collapse of the lender in 2014 when it went into curatorship and had to be rescued by the central bank.
The Reserve Bank is expected to ditch its shareholding when AfricanBank goes public in 2025 after having staged a recovery in its fortunes.