A Mauritian investment company will pay Sh237.4 million to acquire a controlling stake in Key Microfinance Bank (formerly Remu Microfinance).
This follows the National Treasury Cabinet Secretary Ukur Yatani's clearance for LOLC Mauritius to acquire 73.29 per cent stake in the microfinance lender, deepening deals in the sector.
LOLC Mauritius, a firm organised under Mauritius laws, is 100 per cent owned by LOLC Holdings - a Sri Lankan firm.
Key Microfinance Bank hopes to ride on the expertise from this new shareholder given that LOLC Holdings is a microfinance operator with presence in eight countries.
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The deal involves the creation of 31.486 million new class of shares priced at Sh7.54 each. This means LOLC will pay Sh237.41 million to get 73.29 per cent stake in Key Microfinance.
Fusion Capital, which has been the main shareholder with 23.47 per cent stake, will after the deal hold 6.1 per cent stake.
The rest of the existing shareholders, excluding Fusion Capital, will hold 20.61 per cent in the micro-lender.
The Microfinance Act, 2006 does not allow a single person or institution to hold more than 25 per cent stake in a microfinance firm but as a new shareholder, LOLC, has been given an exemption for four years through a special gazette notice.
“The CS for the National Treasury and Planning exempts LOLC Mauritius from the provisions of section 19(1) of the Act for a period of four years from the 1st January 2022,” said CS Yatani in gazette notice.
This means LOLC Mauritius will have up to the end of 2025 to cut down its direct or indirect holding of ordinary shares in Key Microfinance to below a quarter.
LOLC Mauritius will get powers to appoint five directors to the board while Fusion Capital will get one seat.
The minority shareholders, excluding Fusion, will appoint two directors.
Details of the transaction show that LOLC Mauritius can upgrade Key core banking platform and other operational systems.