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Foreign Exchange Travelex gets go ahead for FX Africa deal.

Summary: Travelex, the world's leading provider of foreign exchange and international payments, will become a major shareholder in one of South Africa's largest consumer foreign exchange providers after gaining approval from the country's regulators, writes Alex Twine.

Travelex agreed the purchase of a 49% stake in FX Africa Foreign Exchange (FX Africa) in December 2010. However, the deal was subject to approval from the South African Reserve Bank, which has now been granted.

FX Africa operates a total of 63 retail outlets, with 52 in South Africa, four in Botswana and seven in Zambia. Headquartered in Johannesburg, the company was founded from only two branches in 2001 and now employs around 260 people. Its primary focus has historically been outlets in mainstream shopping centres, as well as large corporate accounts.

Travelex, already Africa's principal supplier of wholesale banknotes, has been operating in the south of the continent since 2006 by way of its operating franchise, Travelex Retail Foreign Exchange, with FX Africa.

Thebe Tourism Group, one of the oldest broad-based black economic empowerment(BBBE) companies in South Africa, owns just over half of the issued share capital of FX Africa. Thebe Tourism Group is itself a subsidiary of Thebe Investment Corporation, established in 1992 by the Batho Batho Trust, a community-based trust whose first chairman was Nelson Mandela.

Thebe Investment Corporation was the pioneer of BBBE in South Africa and over the years has become one of South Africa's most successful investment management companies. Thebe will work in close partnership with Travelex in developing the company's future strategy. Peter Jackson, CEO of Travelex, said: "FX Africa is a business we know well following our successful franchise relationship with them over the last four years. We are delighted to have now taken a significant shareholding which is the natural next step for Travelex as a platform to expand across this fast-growing region."

Jackson said that "there is a great opportunity to continue the expansion of FX Africa under the Travelex and Thebe brands, further developing FX products and services available to customers and increasing the network of retail outlets.

The deal with FX Africa is in line with Travelex's strategy of "focusing on fast-growing and emerging markets to build on our global footprint", Jackson said. It comes in the wake of its acquisition of Grupo Confidence, Brazil's largest foreign exchange provider, in May. Travelex believes that developing countries are set to play a key role in the global consumer FX market, with many expected to overtake their European counterparts in the next few years.

Andre Bouwer, CEO of Thebe Tourism Group, said: "Our partnership with a player of the size and calibre of Travelex presents FX Africa and Thebe Tourism with enormous new business opportunities. We have every confidence that this partnership will help realise our vision of accelerating our growth into the continent and expanding our share of the South African consumer and corporate market."

South Africa was not immune to the global economic downturn. However, the country is believed to have good growth prospects ahead of it. According to the latest figures from the International Monetary Fund, GDP is predicted to grow by 3.8% next year and by 4.5% by 2016.

Founded by British entrepreneur Lloyd Dorfman from a single shop in London in 1976, Travelex has grown to become the world's leading provider of foreign exchange and international payments. The company processes around Au20bn of foreign exchange transactions every year.

The group's consumer-focused operations provide cash and pre-paid cards to over 30m retail customers each year through a network of over 1,000 stores and more than 500 ATMs spread across 24 countries around the world, as well as a growing online platform.

It also has business-focused operations, Travelex Global Business Payments (TGBP), which provide international payments to over 35,000 SMEs.

The group announced the sale of TGBP to Western Union for Au606m in July, allowing it to focus on its retail customers, as well as its international consumer payments and wholesale banknote operations. n

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Publication:African Banker
Article Type:Company overview
Geographic Code:6SOUT
Date:Dec 29, 2011
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