Johannesburg — US INVESTMENT bank Merrill Lynch is selling an initial 8,5% stake in its South African business (MLSA) to staff, an education trust and black investors.

It plans to increase the stake to 15% in the future.

Merrill Lynch is the first US bank in SA to sell a stake to black investors and the second foreign bank, following Deutsche Bank's sale of a stake in its local business to black investors last year.

Merrill Lynch is the largest US securities firm by market value. MLSA has a 14% share of all trade on the JSE, making it one of the largest securities players in SA.

It has advised on key corporate transactions, including Barclays' purchase of a majority stake in Absa, the sale of Harmony's stake in Gold Fields and the Public Investment Corporation's acquisition of a 20% stake in Airports Company SA.

Under the financial sector charter, foreign banks can opt to earn more points from financing empowerment deals rather than selling an equity stake.

However, Merrill Lynch's chairman for Europe, Middle East and Africa, Bob Wigley, said the deal reinforced the group's long-term commitment to SA. The deal was unique because it included the value of the company's local operations and contributions to the South African business from New York and London, MLSA CEO Adam Horowitz said.

Tselane Basadi, a consortium of black women professionals led by Namane Magau, will buy a 5% stake in MLSA.

Magau is president of the Businesswomen's Association of SA and is on the boards of Santam and Murray & Roberts.

The Merrill Lynch Education Trust, which will help finance tertiary financial services education for black students, will get 1%.

Current and future black staff will get 2,5%, with the potential for this to increase to 9%.

The Black Employees Trust and Tselane Basadi will have seats on the MLSA board.

The investors will be given shares in New York-listed parent company to the value of the 8,5% of MLSA, which may not be sold until after 2014.

The company did not disclose the value of the transaction.

It said it would lend Tselane Basadi the money to pay for the stake in its business.