Tradek Eyes Top Spot Among South African Online Brokerages

Online broker appears to be consolidating its position as the premier South African brokerage, announcing this week a major acquisition and an exclusivity agreement with financial group Saambou Holdings.

The Saambou agreement provides the broker with rights to sell online stock broking services to Saambou’s existing clients. The agreement specifies that Tradek will establish a new division that will offer online banking services to this group, allowing the broker to market its share service to this client base.

Saambou will receive shares in Tradek based upon the profitability of the new enterprise over a three year period, up to a maximum of 56 million shares trading at 85c apiece. Provided that the three-year profit targets are met, these shares will mean that Saambou will acquire a maximum 40 percent stake in Tradek. The new division will be flighted early in April.

The other major development for the online broker was the announcement last week that the company had purchased stock broking company E.W.Balderson (EWB) for as much as 25.1 million rand (approximately $4 million). EWB is a long-established broker, having been in business since 1931 but had no Internet presence prior to the Tradek deal.

The purchase price will be settled through the issuing of between 25 and 45 million shares at 55c apiece, but this deal is subject to the suspensive condition that profit and revenue warranties are met over the course of the next two years.

Both these deals provide a boost to Tradek’s customer base as well as ensure that Tradek achieve a goal stated when the company was first incorporated — diversification its sources of income. Previously the broker obtained income purely from broking fees, but now additional revenue will come from investment margins,
commission and service fees.

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