Corporate News
A K-Rep Bank branch along Kenyatta Avenue in Nairobi. PHOTO | FILE
By DAVID HERBLING, hdavid@ke.nationmedia.com
In Summary
- The International Finance Corporation in 2011 invested $1 million (Sh86.7 million) in K-Rep Bank in return for a 15.18 per cent equity stake, valuing the small lender at $6.6 million (Sh571.1 million.
The World Bank’s private sector lending arm, IFC, is
set to earn nearly half a billion shillings from the impending sale of
its stake in K-Rep Bank, nearly seven times the amount the lender
invested in the micro-financier three years ago.
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The International Finance Corporation (IFC) confirmed in an interview with the Business Daily
that it is one of the shareholders of K-Rep Bank that is in
negotiations to sell its entire 346,000 shares to investment company Centum, which has bid for a majority stake in the lender.
The Washington-based financier in 2011 invested $1
million (Sh86.7 million) in K-Rep Bank in return for a 15.18 per cent
equity stake, valuing the small lender at $6.6 million (Sh571.1
million).
But Centum in July offered Sh2.5 billion to buy
65.9 per cent of K-Rep, effectively pricing the tier three bank at about
Sh3.8 billion.
This means that IFC – the third largest owner of
K-Rep – will receive Sh575 million from the disposal of its assets in
the bank, making a handsome seven-fold return on investment.
“IFC is exiting K-Rep on amicable terms, and wish
the bank’s management continued success and growth,” the financial
institution said in a statement to the Business Daily.
“K-Rep is well placed on its growth path, with a
robust customer base amongst the lower and middle income segment. At
this stage, IFC finds that its role has been fulfilled.”
K-Rep is ranked 28th in size out of Kenya’s 44
banks, with 230,000 deposit accounts and 47,000 loan accounts – giving
it a market share of 1.5 per cent of the banking credit market in Kenya.
Centum currently owns 37,801 shares or 1.66 per
cent of K-Rep. The additional shares it is seeking will make it the
majority shareholder with a 67.54 per cent stake.
The attractive rate of return earned by IFC –
annualised at 87.5 per cent – underlines the lucrative nature of Kenya’s
micro-lending industry dominated by microfinance institutions, savings
and credit co-operative societies (saccos) and shylocks.
“IFC’s investment in K-Rep Bank exhibits our
pioneering efforts to support and strengthen commercially viable
micro-lending institutions, a catalyst for job creation and private
sector development among low-income groups,” it said in 2011.
Dutch lender Triodos Bank, which owns 14.48 per cent of K-Rep, said it would confirm exit from the lender at a later date.
“The acquisition process is expected to be
completed within the next four months subject to regulations. Until that
time we are not in the position to make any public statements,” Triodos
said in a statement to the Business Daily.
The fresh valuations on K-Rep Bank came as the
lender’s half-year net earnings tripled on the back of increased lending
and growth in fees and commissions.
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