$43m sale of Actis stake in dfcu boosts Kampala bourse

DFCU Banking Hall in Kampala. London based private equity fund Actis sold its majority stake in Ugandan lender dfcu Limited for Ush111.9 billion ($43.2 million) to Rabo Development B.V. and The Norwegian Fund for Developing Countries. File  

By David Mugwe and Bernard Busuulwa

London based private equity fund Actis sold its majority stake in Ugandan lender dfcu Limited for Ush111.9 billion ($43.2 million) to Rabo Development B.V. and The Norwegian Fund for Developing Countries
(Norfund) through the Kampala bourse which registered its highest weekly turnover since its establishment.

On Thursday, dfcu Limited shares started trading after the lender requested for a temporary suspension which the Uganda Securities Exchange (USE) granted on April 23 pending regulatory approval for the sale of a 45.02 to the subsidiary of Rabobank of Netherlands and Norfund.

(Read: Actis makes 45pc partial exit from Ugandan lender dfcu)




 A record 147.4 million shares worth Ush113.4 billion ($44.1 million) were traded during the week boosted by the sale of 111.9 million dfcu Limited shares at Ush1,000 ($0.39) each.

Actis, which was span off from Commonwealth Development Corporation (CDC), United Kingdom’s Development Finance Institution, has now been left with a 15 per cent stake in the lender down from 60.02 per cent.

“Deepening and improving access to the financial services sector in Uganda was a key objective that the investment in dfcu made possible. The involvement of a new shareholder provides dfcu with a leading global financial services partner that will open up new opportunities and add significant strategic direction to the bank,” said Michael Turner, Managing Director of Actis in East Africa.

The partial exit came only months after the private equity fund made another partial exit from Uganda’s power distributor and another Rwanda lender.

The private equity fund which said that intends to invest at least $200 million in private equity and real estate in East Africa over the next four years, last year sold a 80 per cent stake in BCR, a Rwanda lender, to a consortium composed of Kenya’s I&M Bank and two developmental institutions - German DEG and French Proparco.

It also sold a 39.92 per cent stake in Uganda’s power distributor Umeme through an initial public offer at the Kampala bourse.

Rabo Development B.V. said that it will now be able to appoint up to three members to dfcu Limited’s board of directors, a move that will help it participate in the decisions and strategy of the lender.

It said that it will target to grow the lenders rural base client base including small and medium sized businesses, farmers and the unbanked community.

“With this acquisition deal, we intend to penetrate regional markets through new partnerships built by the new investors instead of raising new funds for the purpose. CDC’s willingness to retain a 15 per cent stake in dfcu Limited is a vote of confidence in the institution’s long term viability,” said Sam Kibuuka, dfcu Limited’s chairman.

The subsidiary of Rabobank of Netherlands bought a 27.54 per cent stake while Norfund purchased a 17.48 per cent stake, increasing its shareholding to 27.54 per cent.

Other shareholders of dfcu Limited include Uganda’s National Social Security Fund, Central Bank of Kenya Pension Fund, Pinebridge, Bank of Uganda Staff Retirement Fund, Kenya Airways Limited Staff Provident Fund, UAP Insurance Company and Jubilee Investments.

“We are partnering with local banks in Africa in specific countries that bear strong agricultural potential. Through this transaction, we intend to invest lots of technical and financial resources in agricultural lending across the value chain backed by 150 years of experience,” said Niels Berendsen, executive director at Rabobank B.V.

The lender was listed on the USE on October 14, 2004 and on that trading day its share opened at Ugs290 ($0.17) and closed at Ugs305 ($0.18), giving it a value of Ugs45.7 billion ($26.3 million).

Its last traded price before the suspension of trading at the USE was Ugs1,030 ($0.41) and the lender was valued at Ugs256.06 billion ($101.49 million).

dfcu Bank released its financial results for the year ended 2012, showing a 5.2 per cent fall in net profit to Ugs29.89 billion ($11.85 million) from Ugs31.54 billion ($12.5 million) as at December 2011.