Equity Bank has announced that it has closed the acquisition of 79 per cent equity stake in Congolese bank Pro-Credit after securing all regulatory approvals.
The lender yesterday issued a shareholder notification putting the effective date of the acquisition as September 29, 2015.
In consideration of the 79 per cent stake, Equity Group has issued 70,897,782 shares representing 1.9 per cent increase in total issued shares. Standard Investment Bank (SIB) said in its mid-morning note that in May it had estimated Equity would issue between 70.03 million to 85.03 million new shares.
“With nine of the listed banks on average controlling more than 70 per cent of the banking industry in Kenya, in terms of profits, advances and deposits, expansion into other markets remains a practical strategy for sustaining margins and balance sheet growth,” SIB said.
The buyout is part of the banking group’s bid to expand outside of East Africa. Pro-Credit has assets of more than $200 million (Sh21 billion) and a customer base of 170,000. It is the seventh-largest bank by assets in Congo.
Equity Bank posted a 12 per cent rise in pretax profit to Sh12.1 billion in the first half of 2015. In a recent investors briefing, Equity Group CEO James Mwangi (pictured above) said the acquisition provides Equity Group with a great platform to further the group’s growth objectives while extending its mission of financial inclusion across Africa.
“We are excited about our entry into Sub-Saharan Africa’s third most populous country through the investment in a fast growing, well established and highly regarded bank,” he said.
Phillip Sigwart, former chairman of ProCredit’s board of directors, now assumes the position of chief executive of the group’s new subsidiary in DRC. ProCredit has among its shareholders the German Development Bank KfW and the International Finance Corporation, which currently hold 12 per cent and nine per cent of the bank’s issued share capital respectively.