Equity Group buys into DR Congo bank for Sh6b in pan African expansion bid

Equity Group Holdings CEO James Mwangi (seated left) signs the deal agreement with ProCredit Holding Manager, Helen Alexander. Looking on are from left: Equity Group Holdings’ Director Strategy and Company Secretary, Mary Wamae, Chairman, Peter Munga and Rosa Nduati – Mutero Partner Anjarwalla & Khanna Advocates. [PHOTO:COURTESY]

Equity Group Holdings Ltd has acquired 79 per cent of ProCredit Bank Congo, subsidiary of a German-based multinational bank operating in the Democratic Republic of Congo (DRC).

The $60 million (Sh5.8 billion) deal, which is still subject to regulatory approval in Kenya and the DRC, is in line with its 10 year strategic plan that will see Equity Bank expand its network to 10 countries in Africa, raising its customer base to 100 million within this period.

SME sector

The other shareholders of the DRC bank will remain International Finance Corporation(IFC) with 9 per cent shareholding and German Development Bank (KfW) having a 12 per cent stake.

ProCredit Bank is a leading player in the SME sector in the DRC, the 7th largest bank with this market with total assets exceeding $200 million, net assets of $25 million and a customer base of 170,000.

“This is the first time we are venturing outside East Africa and the DRC gives us the opportunity to test our resilience and strength as well as provide services to a vast population that is still unbanked. We also intend to contribute significantly to peace and stability in DRC through empowerment of the Congolese people,” said James Mwangi, Equity Group Holdings Limited chief executive officer.

Available figures indicate that DRC has a population of over 85 million with a paltry 4 per cent having bank accounts.

Equity Group is confident that it will overcome infrastructural challenges, language barrier, political instability and foreign exchange risks to turn the DRC subsidiary into a profitable venture.

“We have considered the vastness of DRC and decided not to go for the Greenfield option. Instead, we are going to use mergers and acquisitions to enter this new territory.

Most of the top banks here are family-owned, giving us sufficient headroom to grow our business,” said Mwangi.

Equity Group said it has set aside $ 60 million to increase ProCredit’s network as well as strengthen the bank’s delivery channels and systems, relying heavily on mobile and agency banking platforms.

“We are selling off this business so that we can focus on our strategy of expanding to Eastern Europe. It is a negotiation that has taken over six months and we chose Equity because it brings experience, capital resources and commitment to the DRC,” said Helen Alexander, Manager at ProCredit Holdings AG.

financial solutions

ProCredit Bank Congo S.A , part of the International ProCredit Group, headquartered in Frankfurt Germany, established in DRC in 2005 and is focused on providing financial solutions to support small and medium-sized enterprises.

Equity Group will be relying on its partnership with mobile service provider Airtel, to increase its footprint in the Democratic Republic of Congo, using this market as a spring board into Mozambique, Malawi and Angola which are on the list of its next destinations in its expansion strategy.

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