South Africa Based Investment Bank Investec To Make Australian Investments, Reports

Online, September 18, 2010 (Newswire.com) - In an effort to build its asset management business in Australia, South Africa based Investec is mulling acquisition investments in the country. Speaking to Reuters Thursday, Investec's chief said the firm might be considering acquisitions to bolster its Australian offering. The South Africa based investment bank and fund manager has other global operations in the UK. Recently, Investec cut down on its dependence on lending by boosting its fund operations.

At the beginning of 2010, the firm made an acquisition in the UK, taking over Rensburg Sheppards, the British wealth manager. The chief executive, Stephen Koseff, told Reuters Investec is moving towards establishing a similar Australia business, to complement its UK operations. The firm does not have an Australian business model that is comparable to its UK venture and such a business is not easy to develop organically, said Koseff.

In that effort, Investec is looking to make an Australian acquisition that is viable and appropriate for its business, added Koseff. Investec is the fifth biggest bank in South Africa and reported it hopes its first half profits will rise, albeit by a small margin, as weak demand for loans was offset by growth in its funds business, it reported Thursday. Its operating profit will be "marginally higher" in the coming six months to end September, reported Reuters.

According to Investec, the slow economic recovery is keeping bad debts high, a fact that has disappointed investors who were expecting a more optimistic outlook. Analysts however supported the banks stand over debt, saying the trend globally has witnessed an experience in which bad debts are sticky and to expect otherwise is futile. Most South African banks have been hit as consumer finances and corporate earnings remain weak following the global financial meltdown.

Investec could also face increased competition in its home market, where HSBC, Europe's biggest bank, is in talks to buy a majority stake of local lender Nedbank, Reuters said. But even so, Koseff reiterated that competition from HSBC in South Africa is not one of those things he is concerned about currently. However, he admitted it might be tough, adding that HSBC makes for a good competitor.

Investec has expanded through a combination of substantial organic growth and a series of strategic acquisitions and provides a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other geographies.
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