Old Mutual injects Sh2.8b for majority stake in Faulu Kenya

By JAMES ANYANZWA

NAIROBI, KENYA: Old Mutual Kenya has completed the acquisition of a controlling stake in Faulu Kenya, a deposit taking microfinance institution, with an initial injection of Sh2.8 billion in fresh capital.

The transaction valued at around Sh3.6 billion forms part of Old Mutual’s global ambitions of becoming a leading financial super market.

The deal is also part of Old Mutual’s emerging markets expansion strategy, which seeks to grow presence in Africa under a massive $500 million (Sh43 billion) investment plan.

The transaction concludes a two-year divestiture programme that has seen Faulu engage with over 20 potential financial partners, subsequently narrowing down to six suitable local and international investors. In a statement Wednesday Old Mutual confirmed that the deal, which was first made public in July last year was completed on March 26th, 2014.

FINANCIAL SERVICES SHOP

“This deal further demonstrates how committed we are to growing our business in Kenya and indeed the larger East Africa region. We are pleased that all regulatory approvals have been received and look forward to offering Kenyans a one stop financial services shop,” said Rueben Java, chief executive, Old Mutual Kenya.

The acquisition of Faulu Kenya is also expected to provide the financial services group with a concrete platform to roll out its insurance products to millions of Kenyans.

“This marks yet another milestone in our East Africa growth story. I would like to commend the teams for demonstrating patience and diligence throughout this long but necessary process that will deliver significant mileage in our efforts to expand our distribution and product proposition to Kenyans,” said Johannes Gawaxab, Managing Director, Old Mutual Africa.

As part of its emerging markets expansion strategy, Old Mutual has an objective to grow its presence in Africa, Asia and South America.

Faulu is the pioneer microfinance company in Kenya with a wide distribution network of over 100 outlets with 32 banking branches in 44 out of the 47 counties.

With over 400,000 active customers Faulu offers both credit and savings and diverse micro-insurance products to suit different customers’ unique financial needs.

Faulu Kenya Managing Director, John Mwara said the Sh 3.6 billion capital injection would enable the MFI to expand banking services and insurance products to more Kenyans who are financially excluded in the micro, small and medium enterprises space.

“Old Mutual as a strategic partner to our business brings a host of benefits not only to our customers who will now be able to access cheaper loans from Faulu branches, but also to our staff. Giving unemployed youth new employment opportunities and the multiplier effect on the economy cannot be understated,” Mwara explained.