Old Mutual bid for Faulu collapses

Old Mutual managing director Tavaziva Madzinga. The firm was keen on getting a piece of Faulu’s business as it pursues the financial supermarket model, which includes trading share. Photo/File  Nation Media Group

By GEOFFREY IRUNGU

In Summary

• Old Mutual it did not give reasons for the failed bid that had attracted 12 investors, with six of them being shortlisted by the micro lender.

Old Mutual‘s bid to acquire a stake in Faulu Kenya has collapsed, with the firm now saying it is seeking other buyout opportunities.

But it did not give reasons for the failed bid that had attracted 12 investors, with six of them being shortlisted by the micro lender.

“Our attention is not there (Faulu Kenya) any more,” Tavaziva Madzinga, the managing director of Old Mutual Kenya told the Business Daily in an interview Thursday without giving details.

“But that is not to say we are no longer interested in expansion. We are looking at other opportunities elsewhere and also focusing on the counties as we seek to expand our business.”

Old Mutual was keen on getting a piece of Faulu’s business as it pursues the financial supermarket model, which includes trading shares, selling insurance products and offering loans.

READ: Old Mutual lines up to buy Faulu as MFIs cut ownership

The sale was to allow Faulu Kenya, majority owned by non-governmental organisation Food for the Hungry International (FHI), to diversify its ownership and meet the Central Bank of Kenya shareholder caps. The regulator bars investors who are not banks, foreign finance companies or the government from owning more than a 25 per cent of local banks.

The micro lender is also expected to raise cash from the share sales that will most likely involve the creation of new shares rather than the exit of current shareholders to accommodate new investors.

We could not establish whether or not Faulu has sold shares to one of the six firms it had shortlisted.

Faulu became the first microfinance institution (MFI) to gain permission from the Central Bank in May, 2009, to accept deposits for onward lending instead of relying on donors and commercial institutions to support its loan book.

Since then, the CBK has licensed six deposit-taking MFIs, including Kenya Women Finance Trust (KWFT), Uwezo, Remu, Rafiki and SMEP.

The CBK had given the MFIs until 2014 to keep ownership at a maximum of 25 per cent, sparking a rush among their top shareholder to dilute their stakes.

SMEP in October started a share sale to cut the stake of the National Council of Churches of Kenya (NCCK) to 73.72 per cent.

READ: Church-owned micro financier SMEP in second rights issue plan

KWFT has opened talks with a number of investors to cede a 25 per cent stake to a strategic partner this year.