International banking giant Investec is preparing to scale its core business by increasing its services to mid-market companies.
The FTSE 250 stalwart called the market space “underserved”, with many mid-cap businesses failing to have their need for revenue growth met by corporate banks who often don’t offer a personalised service and may be more risk averse.
Investec is looking to attract more mid-market businesses by expanding its offerings beyond lending.
Chief executive, Fani Titi, said: “Our strategy is to strengthen and scale our mid-market offering, enhancing transactional banking, lending, advisory capabilities and digital client experience, to deliver greater value for clients and enhanced returns for shareholders.”
The group, which has a dual listing on the Johannesburg stock exchange, expects its mid-market growth to be key to improving the group’s profitability by 200 basis points by 2030.
The decision follows the group’s half year trading update, where it maintained its full year guidance, after revenue growth was offset by lower interest rates and wider market volatility.
South Africa and Britain
The group will rely on mid-market divisions in both South Africa and the UK to serve mid-market companies.
The South Africa arm will assist companies with turnovers between R30m (£1.3m) to R1.5bn, offering clients corporate advice, lending and advisory solutions.
It aims to more than double its mid-market profit contribution by 2030, establishing 10,000 client relationships and increasing revenue to approximately R3.8bn.
Nick Riley, head of Investec’s South African mid-market business said the branch is working to “anticipate” business needs, recognising the “crucial role” the sector plays in generating economic growth.
In the UK, Investec Bank (IBP) will build on its already established mid-market experience, through increasing investment into its management team, banking services and digital platforms.
The bank predicts this move will allow the group to assist more than 60,000 UK companies and expects to offer tailored, long-term services to 1,000 mid-cap businesses by 2030.
Andy Hart, head of corporate banking at IBP, said: IBP. “We see a clear strategic growth opportunity to extend our offering and bring a private client banking experience to UK mid-market corporates.”
The group’s share price slipped 0.86 per cent to 575 pence in morning trading.