Mauritian SBM Holdings will fully acquire Kenya’s Fidelity Commercial Bank (FCB) before end of the year in a deal valued at Sh100.
In a cautionary announcement posted on the Stock Exchange of Mauritius, the group said it intends to pump in Sh1.46 billion in additional equity once all regulatory approvals have been granted.
“SBM Holdings wishes to inform its shareholders and the public in general that, subject to regulatory approval, it has resolved to proceed with the acquisition of FCB. SBM will acquire the entire share capital of FCB for Sh100 and will inject addition equity Sh1.455 billion,” read the message in part.
Further developments on the deal are expected to be made by the group even as it informed its shareholders and the investing public that intends to seal the deal before the end of December 2016.
The completion of the deal will see the group, which is the second largest company listed on the Stock Exchange of Mauritius, enter Kenyan market as it eyes other markets in the Eastern African region.
Central Bank of Kenya (CBK) has welcomed the move saying that the interest of foreign banks in Kenya will contribute to the emergence of a world-class financial sector.
“SBM Group will bring its experience and expertise from Mauritius and other markets, to enhance competitiveness and the resilience of Kenya’s banking sector,” said CBK in an emailed statement.
With an asset base of about Sh417 billion as at end of September, the entry of SBM is expected to bolster the operations of FCB, whose assets are valued at below Sh14 billion. FCB started operating in Kenya as a non-bank financial institution in June 1992 before converting into a commercial bank in April 1996.
Kenya’s banking sector has been tipped by analysts to be ripe for consolidation, especially with the revelation that just about seven lenders were commanding the market’s liquidity.
As at March 2016, FCB’s liquidity ratio had dropped to 11 per cent, which is below the minimum statutory ratio of 20 per cent.
In its Supervisory Report covering up to December 2015, CBK ranked it 31 of 41 banks in terms of market share. It has 14 branches around the country.
SBM Group’s banking arm, SBM Bank (Mauritius) Ltd, is a leading bank in Mauritius with footprints in India, Madagascar, and a representative office in Myanmar. The entry into Kenya is a continuation of its international expansion strategy.
In August, the group had announced plans to establish presence in Seychelles and Kenya as well as grow footprints in India in the medium term.
The deal comes at a time the banking sector is readjusting to the regime of capped interest rates and heightened supervision from CBK