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Tuesday, August 11, 2020
Equity buys Sh10b stake in DRC bank
By Dominic Omondi
Equity Group Holdings has acquired a majority stake in a Congolese bank
at a cost of Sh10.3 billion as the race to the pinnacle of Kenya’s
banking sector intensifies.
In a public announcement, Equity Group CEO James Mwangi (pictured)
said yesterday the lender had reached an agreement with George Forrest
and met all regulatory approvals, paving the way for the acquisition of
all the 625,354 shares (66.53 per cent) owned by the Belgian in Banque
Commercial du Congo (BCDC).
This comes a month after Kenya’s second lender shelved plans to acquire
London Stock Exchange-listed Atlas Mara, citing challenges occasioned
by the Covid-19 pandemic.
The transaction would have seen Equity acquire a 62 per cent stake in
Banque Populaire du Rwanda (BPR) and all of Atlas Mara’s subsidiaries in
Zambia, Tanzania and Mozambique (BancABC).
“EGH (Equity Group Holdings) is pleased to inform its shareholders and
the public that the condition precedent in the acquisition, including
the receipt of corporate and regulatory approvals, have been fulfilled
and/or waived and the acquisition was completed on August 7,” he said.
Equity Group, which now has two subsidiaries in the Democratic Republic
of Congo, having earlier acquired ProCredit, a German bank, is banking
on this amalgamation to penetrate this resource-rich economy.
Mwangi reckoned that the acquisition would inflate Equity’s balance sheet in excess of $2 billion (Sh216 billion).
He said the merger would produce a subsidiary, contributing more than 20
per cent of the group’s total balance sheet. “We take this opportunity
to welcome BCDC directors and employees to the EGH Group and look
forward to working together to provide BCCDC’s current and new customers
with access to competitive, tailored financial services to improve
people’s lives and livelihoods whilst also delivering significant value
to our stakeholders.” Equity launched the takeover bid of the bank on
November 19, 2019 as the lender - which besides Kenya, also has a
presence in Uganda, Tanzania, Rwanda, South Sudan and DRC - sought to
spread its wings beyond the East African region.
Erstwhile BCCDC shareholder, Mr Forrest, said he chose the Kenyan lender
because he believed it would add value to the Conglese banking sector.
“I sell my shares to Equity in the trust that it will make it the
largest bank in Congo and continue to contribute to the development and
transformation of the country,” said Forrest. Equity, which is listed at
the Nairobi Securities Exchange, registered a dip in profit after tax
for the first three months of this year owing to the uncertainty of
Covid-19, with the lender setting aside a lot of money as insurance
against possible loan defaults.
KCB, Kenya’s largest bank by asset size, has also been busy swelling its
ranks. Last year, it acquired National Bank of Kenya. There have also
been mergers, such as between Commercial Bank of Africa and NIC Bank,
which culminated into NCBA.
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