Discovery launches bookbuild to fund bank stake. The Competition Tribunal approved the transfer of FirstRand's stake in the Discovery card joint venture to Discovery Bank on Wednesday.

Discovery Holdings has opened an accelerated bookbuild to raise the R1.85 billion it needs to buy FirstRand's 25.01% stake in Discovery Bank. This was a requirement of the Registrar of Banks when it granted Discovery a banking licence last year. As part of the transaction, the Discovery card book and related assets will be migrated across to the new bank.

Discovery said the transaction will see it take over FirstRand Investment Holding's effective interest in the soon-to-be-launched bank, as well as its economic interest in their Discovery credit card joint venture. The share placement is being made to qualifying investors only and isn't open to the public.

Since the acquisition constitutes a new initiative and presents an important opportunity for Discovery, the board has decided that the acquisition should be funded by way of an equity issuance limited to the acquisition consideration," Discovery said.

Already, Rand Merchant Insurance Holdings, which owns 25% of Discovery's ordinary shares, has said it will apply for up to R464 million worth of the placement shares at the clearing price of the bookbuild, while Discovery directors including Adrian Gore, Barry Swartzberg and Herschel Mayers, who own 13% of Discovery between them, have committed to subscribe for R240 million of shares.

The Competition Commission recommended the deal to the Competition Tribunal, which approved it without conditions this week. The launch of Discovery Bank was delayed pending the transaction with FirstRand.

Discovery's shares ended 2.1% lower yesterday. It announced the bookbuild after the close of trade.

Outcome of Discovery Bank transaction and other Tribunal hearings -

-- Competition Tribunal (@comptrib) November 7, 2018