Eskom Finalises Sale of Finance Arm to African Bank, Advancing Asset Disposal Plan

In its latest update, Eskom confirmed that the necessary sale agreements have now been signed, officially initiating the next phase of the transaction.

In a significant move aligned with its broader operational and financial restructuring goals, South Africa’s state-owned power utility, Eskom Holdings SOC Ltd, has formally concluded the sale agreements with African Bank Limited for the acquisition of Eskom Finance Company SOC Limited (EFC). This development marks a critical milestone in Eskom’s roadmap to dispose of non-core assets, in line with conditions outlined under the National Treasury’s debt relief programme.

Deal Overview and Background

The agreement, which involves the sale of EFC’s staff home loan portfolio, associated assets, and Eskom’s equity in Nqaba Finance 1 (RF) Limited, follows the initial binding offer accepted by Eskom on 5 December 2024. The transaction was first communicated through a Stock Exchange News Service (SENS) announcement, which highlighted African Bank’s proposal to take over Eskom’s financial services subsidiary that has primarily managed housing loans for Eskom employees.

At the time of the December 2024 announcement, Eskom and African Bank were engaged in finalising the terms of a comprehensive sale and purchase agreement, which was subject to multiple conditions precedent. These included the receipt of board consents, internal approvals, and regulatory green lights, particularly from the Competition Commission and the Prudential Authority.

Sale Agreements Signed, Regulatory Filings Underway

In its latest update, Eskom confirmed that the necessary sale agreements have now been signed, officially initiating the next phase of the transaction. One of the pivotal conditions — the formal signing of the agreements — has been satisfied, enabling both parties to proceed with regulatory filings to the Competition Commission for antitrust and market conduct reviews.

“Finalising the sale agreements marks a significant step in Eskom’s journey to streamline operations and focus on its core mandate,” said Calib Cassim, Eskom’s Chief Financial Officer. “This transaction not only supports our strategic goals but also fulfils one of the conditions set by the National Treasury under the debt relief programme, which requires the disposal of non-core assets.”

Focus on Core Functions and Fiscal Sustainability

Eskom’s divestment of EFC forms part of a broader initiative to simplify its structure, concentrate resources on energy generation and transmission, and stabilise its financial position. The disposal is particularly noteworthy as it demonstrates Eskom’s commitment to fulfilling the terms attached to the R254 billion debt relief programme provided by the South African government. One of the key conditions of the package is for Eskom to identify and dispose of assets that do not directly support its electricity mandate.

The proceeds from this transaction are expected to help Eskom alleviate part of its debt servicing burden, which remains a significant challenge amid operational setbacks and infrastructural strain.

African Bank's Strategic Interest

For African Bank, the acquisition is a strategic fit. Expanding into the secured lending space — especially housing loans — aligns with its diversification objectives and enhances its consumer lending portfolio. The acquisition of EFC allows the bank to enter a stable, employer-linked lending environment while also growing its asset base with a performing loan book.

In recent years, African Bank has pursued several initiatives to transform itself into a diversified retail bank after emerging from curatorship in 2016. The EFC deal strengthens its offering in mortgage-related products, tapping into Eskom’s employee customer base.

Next Steps and Stakeholder Communication

Eskom emphasized that it remains committed to transparency and stakeholder engagement as the process continues. Further updates will be communicated as regulatory processes advance and the transaction nears final closure. The power utility reiterated that the transition will be managed to ensure minimal disruption to stakeholders, including employees whose loans fall under EFC’s management.

Both Eskom and African Bank expressed confidence in the constructive nature of their engagements and reiterated their shared commitment to ensuring a seamless transfer of operations and assets.

This transaction represents more than a change of ownership. It signals Eskom’s readiness to adhere to fiscal discipline, streamline its business, and concentrate on resolving South Africa’s energy crisis. Simultaneously, it opens a growth avenue for African Bank as it consolidates its position in South Africa’s retail banking sector.