Equity to buy four banks in renewed expansion appetite

Equity Bank Chief Executive James Mwangi says assets of four regional banks it wants to acquire from investment firm Atlas Mara will more than double its size in the markets and shield subsidiaries from risks.

Mr Mwangi said acquisition of 62 per cent of Banque Populaire du Rwanda will triple its size in the market while African Banking Corporation Tanzania, whose entire stake Equity wants to buy, will double the size of its subsidiary in the market.

He said a 100 per cent stake in African Banking Corporation Zambia gives Equity a footing in copper trade while African Banking Corporation Mozambique will take the East African lender further south from its traditional markets.

“When there are risks they tend to affect smaller banks, even here in Kenya, but larger banks are barely touched. So in Tanzania we will get to double our size and triple our size in Rwanda,” Mwangi said during the bank’s annual general meeting in Nairobi yesterday.

Equity has offered Atlas Mara Sh10 billion worth of shares in exchange for the banks', which will give the London-listed investment company a 6.27 per cent stake, or 252 million shares, in Equity but subject to due diligence of the banks value.

“The actual aggregate consideration ultimately payable will be that set out in the detailed transaction agreements negotiated following completion of the confirmatory due diligence and may be subject to adjustment,” Equity said in a warning note.

Equity is picking up the pieces of a disastrous six-year experiment by former Barclays Bank Chief Executive Bob Diamond, who wanted to set up an African financial services conglomerate.

He partnered with Ashish Thakkar, the ‘young billionaire’ who left the firm’s board in October 2017 following an investment by Fairfax as part of a revival plan.

Since listing in 2013, Atlas Mara has lost more than 80 per cent of its value including currency devaluation in Nigeria, debt crisis in Zambia and concealed foreign dollar loans in Mozambique.

Deepak Dave of Riverside Capital said Atlas suffered due to lack of a coherent strategy, too much expense and no operational teams to run a successful business, but Equity could overcome the challenges to reap from a good diversification strategy.

In February this year, Atlas announced it would sell its assets in non-core markets and focus on agriculture financing.