HSBC in talks to buy majority stake in South Africa’s Nedbank from Old Mutual for $6.8B

HSBC eyes $6.8B majority stake in Nedbank

LONDON — British bank HSBC Holdings PLC said Monday it is in talks with financial group Old Mutual PLC to buy a controlling stake in Nedbank Group Ltd. of South Africa in a deal worth as much as $6.8 billion.

Old Mutual said the discussions center on the sale of a 70 percent stake in Nedbank, South Africa’s fourth-largest banking group in terms of total assets.

Shares in Old Mutual were up 4.9 percent at 126.9 pence in early trading on the London Stock Exchange. HSBC shares were fractionally higher at 634.4 pence

Old Mutual said the proposed sale, if agreed and approved by regulators and shareholders, would be a major step in its strategy to simplify its business. Proceeds would be used to reduce debt and make new investments in South Africa.

The sale “is likely to result in a material strengthening of South Africa’s financial sector, foreign direct investment by HSBC in the banking sector and material incremental investment by Old Mutual in the long-term savings sector,” Old Mutual said in an announcement to the London Stock Exchange.

On Aug. 6, Old Mutual announced the sale of its U.S. life business to Harbinger Capital for $350 million. It has also said it intends a partial float of its U.S. asset management business.

Old Mutual was founded in 1845 in South Africa as the Mutual Life Assurance Society of the Cape of Good Hope. It is listed on stock exchanges in London, Johannesburg, Zimbabwe, Malawi and Namibia.