Money Markets
Equity Bank chief executive James Mwangi at a past function in Nairobi.
The bank has created 400 million shares with a current market value of
Sh20.9 billion, boosting its war chest for acquisition of lenders across
the continent. PHOTO | FILE
By GEORGE NGIGI, gngigi@ke.nationmedia.com
In Summary
- Equity Bank has previously stated its interest in entering neighbouring countries Ethiopia, the war-ravaged Somalia, and the Democratic Republic of Congo.
- The management sees DRC as an attractive economy that can offer opportunity for long-term growth due to its vast mineral wealth and rising population.
- Last year, Equity head hunted Anthony Kituuka from its rival KCB to be executive director in charge of regional subsidiaries.
Equity Bank
has created 400 million shares with a current market value of Sh20.9
billion, boosting its war chest for acquisition of lenders across the
continent through share swaps and private placement.
The bank will, at a shareholders’ meeting scheduled for
Tuesday, seek approval for creation of an extra 411,419,668 shares that
it sees as a key plank in its strategy of transforming into a
Pan-African lender through rapid expansion across the continent.
Equity shares are currently trading at Sh51 per
unit at the Nairobi Securities Exchange (NSE), putting the value of the
new stock at Sh20.9 billion-- equivalent to a tenth of the lender’s
market capitalisation.
“The board, subject to obtaining all requisite
regulatory approvals, be and is hereby authorised to allot and issue the
shares created in a series of transactions by way of private placements
in share swap arrangements to facilitate acquisition of the
subsidiaries,” reads part of the shareholders’ meeting agenda.
The value of Equity Bank’s stock acquisition war
chest could, however, differ substantially from the Sh20.9 billion
indicative market price, depending on the rate at which it allocates the
shares to buyout targets.
Companies ordinarily discount their shares during
stock-financed buyouts to sweeten the deal for the firms they intend to
acquire.
Attempts to reach Equity Bank chief executive James
Mwangi or his personal assistant to comment on the plans were not
successful.
The management of the bank, ranked as Kenya’s most
profitable, will be asking shareholders to approve acquisition of
subsidiaries in Africa “undertaking businesses similar to Equity’s.”
“The board of the company be and is hereby
authorised to approve the terms of such acquisitions and enter into
agreements in order to undertake such acquisitions,” reads the agenda.
Regional expansion
Equity Bank has previously stated its interest in
entering neighbouring countries Ethiopia, the war-ravaged Somalia, and
the Democratic Republic of Congo.
The management sees DRC as an attractive economy
that can offer opportunity for long-term growth due to its vast mineral
wealth and rising population.
Ethiopia may prove to be a difficult market to
enter with existing government regulations locking out foreign-owned
banks, but the country’s leadership has recently showed signs of
loosening up as it seeks to quicken economic growth and create jobs for
its more than 90 million citizens.
Last year, Equity Bank head hunted Anthony Kituuka from its rival KCB to be executive director in charge of regional subsidiaries.
The lender currently operates in Uganda, Tanzania,
Rwanda and South Sudan. The regional operations contributed Sh1 billion
to its bottom line last year, up from Sh245 million a year earlier
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