RCS said that it had entered into commercial agreements with Edcon, inclusive of credit cards, store cards and personal loans.
RCS said the transaction purchase consideration would be settled by a combination of internal cash resources and funding to be provided by Rand Merchant Bank, a division of FirstRand Bank and The Standard Bank of South Africa.
Arrie Rautenbach, the chief executive of Absa Retail and Business Bank, said that the sale was positive for Absa as it would free up capital and management time to focus on executing against the strategy that Absa announced last year.
“In terms of the strategy, our priority is to regain our leadership in core areas,” Rautenbach said.
Absa acquired the debtor’s book in 2012 after Edcon sold it as the troubled retailer – the owner of Edgars, CNA and Jet – for the rights to provide consumer finance products to Edcon customers – tried to reduce its large debt burden.
Grant Pattison, the chief executive of Edcon, said partnering with RCS would not only grow Edcon’s credit business and customer base, but it would also offer their customers a more diverse and dynamic set of consumer finance solutions.
“Edcon, in working together with RCS aims to take the lead in customer service and credit management, retaining ownership of the customer journey and improving our customer’s omnichannel experience.
“Our top priority is to ensure the accelerated growth of credit sales, which is key to Edcon’s turnaround plan. We look forward to strong growth in this next and promising chapter of Edcon,” Pattison said.
“This deal significantly strengthens our position as the leading provider of retail consumer finance products and provides the company with the opportunity to grow for the benefit of our shareholders, our people and our customers,” Regan Adams, the chief executive of RCS, said.
The RCS Group (RCS) is a consumer finance business that offers its customers a range of financial services products under its own brand name and in association with a number of leading retailers in South Africa, Namibia and Botswana.
Edcon Ltd is the leading clothing, footwear and textiles retailing group in South Africa trading through a range of retail formats. Its subsidiaries include Edgars, a department store with 203 branches.