Kenya’s Equity Group Holdings has revealed ongoing talks with London-listed financial services firm, Atlas Mara Limited about acquiring stakes in banks in Rwanda, Zambia, Mozambique and Tanzania.
According to cautionary notice signed the group’s managing director and chief executive officer,Dr. James Mwangi, Equity Group is entering transaction agreements to acquire via a share swap 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda, 100 per cent of African Banking Corporation of Zambia, African Banking Corporation Tanzania and African Banking Corporation Mozambique.
Equity Group, Kenya’s second biggest bank by assets, said it would issue 252,482,300 new shares, representing 6.27 percent of its expanded share capital in consideration of the shares Atlas Mara owns in the target banks.
“This implies that the monetary value of the consideration to be paid is the equivalent to approximately US$105.4 million,” the statement reads.
The deal is subject to regulatory approvals in the various countries and once finalised, Atlas Mara would become one of Equity’s shareholders, it said.
Equity added it may also seek to buy additional stakes in Banque Populaire du Rwanda from some or all the remaining shareholders.
Last week, Kenya’s biggest lender by assets KCB Group, offered to buy National Bank of Kenya through a share swap.
CBA Group, a privately held bank, is in the process of merging with NIC Bank to form the third biggest bank by assets in East Africa. There have been other smaller transactions including Diamond Trust Bank’s acquisition of Habib Bank Kenya in 2017.
Atlas Mara first entered the Rwandan market in 2014 when it took over part of the Development Bank of Rwanda (BRD) before it went on to acquire 62 per cent stake in BPR the following year.
Atlas Mara invested more thanUS$20.4 million in BPR and merged it with BRD Commercial Bank, part of Development Bank of Rwanda (BRD) in 2014 as part of a strategy to deepen financial inclusion.
In April 2015, Atlas Mara acquired minority shares in BPR and later in 2016 merged BPR with the commercial wing of the Development Bank of Rwanda (BRD) that it had acquired in 2014 giving Atlas Mara the controlling stake of 62.1 per cent of shares. BPR is the second-largest commercial bank by total assets, and largest bank in Rwanda in terms of customer base and branch network.
Atlas Mara had dismissed as rumours reports that it is up for sale due to tough economic conditions.
The Atlas Mara’s co-founder Bob Diamond said instead they were looking to buy more banks across the African continent.
Reports that Atlas Mara Group was seeking a buyout were largely brought about by the performance of the firms’ shares and further fuelled by the abrupt unexplained exit of the group’s former chief executive, John Vitalo.
Fears about the bank’s operations in Rwanda were also heightened due to its cost-to-revenue ratio which last year stood at around 95 or 96 per cent and one of the highest in the industry.
The bank is now the second largest commercial bank by total assets, and largest bank in Rwanda by customer base and branch network.