Britain’s CDC fourth largest I&M owner after 10.6pc stake buyout

Money Markets

An I&M Bank branch in Nyeri County. UK fund CDC is now the fourth largest owner of the lender after buying out Germany’s DEG and France’s Proparco. PHOTO | FILE 

By BRIAN NGUGI

In Summary

• The CDC agreed to fully buy out DEG and Proparco, which hold a combined 10.68 per cent stake, to become the fourth largest owner of lender.

Listed I&M Bank has concluded an acquisition deal with British fund CDC after fulfilling the necessary conditions.

The CDC agreed to fully buy out German and French development finance institutions, DEG and Proparco, which hold a combined 10.68 per cent stake, to become the fourth largest owner of lender.

“Further to the cautionary announcement on April 18, in respect of the proposed acquisition of approximately 10.68 per cent of the issued ordinary shares by CDC Group Plc, I&M Holdings is pleased to inform its shareholders and the investing public that all the conditions precedent to completion of the acquisition of the shares have been fulfilled and the acquisition of the sale shares was completed on September 30,” said I&M in a regulatory notice.

The sale to the UK government-owned agency was done through a private transfer rather than in the open market at the Nairobi Securities Exchange (NSE) but was still subject to approval from Kenyan and Tanzanian regulators.

The private transfer allowed the seller to load a premium on the prevailing market price. The DEG owned 6.25 per cent of I&M through a nominee account while Proparco held a 4.43 per cent stake.

The CDC has had a number of transactions with Kenyan banks in the past, having provided capital to Equity Bank, Co-operative Bank, Jamii Bora Bank and Chase Bank either through debt or equity.

READ: British firm gets veto power in I&M

The DEG is also a shareholder of Chase Bank, which is under receivership, where it holds a 6.6 per cent stake purchased in 2013.

Proparco is listed as a senior debt lender to Chase with a credit line worth $40 million (Sh4,04 billion).

DEG and Proparco in 2007 initially invested an estimated $4.5 million to acquire a combined 11.96 per cent in I&M, before growing their combined stake to 19.7 per cent after injecting Sh1.2 billion in the bank.

In January 2013, they sold nearly half of their stake at an estimated Sh3.6 billion, cutting their combined holding to 10.68 per cent.

The 2013 sale brought the two firms a 125 per cent return on initial investment even as they were left with shares worth Sh4.2 billion based on I&M’s set valuation of Sh40 billion at the time.

The sale also came ahead of the lenders’ listing at the Nairobi bourse in June 2013, which would result in major shareholders being locked in the company for a two-year period that lasted until June last year.