* To pay 1.8 billion rand
* Hopes deal will boost vehicle finance business
* Imperial shares rise, Nedbank slips (Adds analyst comment, details, updates shares)
By Serena Chaudhry
JOHANNESBURG, Aug 14 (Reuters) - South Africa's No. 4 bank Nedbank has agreed to buy Imperial Holding's 49.9 percent stake in their joint-owned asset financier Imperial Bank for 1.8 billion rand ($225.7 million) to boost its vehicle finance business.
Imperial Bank provides loans for vehicles and property and has access to Imperial's network of car dealerships.
Nedbank said it would settle up to 80 percent of the transaction through Nedbank ordinary shares and the rest in cash. Nedbank also said it aimed to raise up to 1 billion rand by issuing preference shares.
Its shares slipped 0.26 percent to 109.02 rand by 0929 GMT, while Imperial's shares jumped 4.43 percent to 73.10. The JSE All-share index was up 0.48 percent.
Nedbank said the deal would help it to eliminate the inefficient capital and funding arrangement it currently has with Imperial Bank, and would allow it to improve the profitability of its vehicle asset finance business.
"I think it's a good thing ... This enables it (Nedbank) to bolster its retail operations by increasing the amount of vehicle finance and the little bit of property finance that exists inside Imperial," one banking analyst said.
"The vehicle finance operations have not traditionally performed very well at Nedbank. Imperial has a better relationship with the dealer network than Nedbank does, so hopefully Imperial being brought on board would bolster the vehicle finance business somewhat."
Nedbank already owns 50.1 percent of Imperial Bank, an asset financier which provides loans for vehicles and property, and which had net interest income of 1.7 billion rand as of Dec. 31, 2008.
Nedbank currently provides risk management support to Imperial Bank, while Imperial provides access to a network of logistic and transport services in South Africa.
Imperial Holdings established Imperial Bank in 1995. The asset financier's property finance business had total assets of 8.4 billion rand as at June 30. (Editing by Rupert Winchester)