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Chase sells subsidiary to support bank’s capitalisation

By Moses Michira and Patrick Alushula | August 23rd 2016 at 00:00:00 GMT +0300

Chase Bank has sold its investment banking arm, Genghis Capital, in a deal that will raise fresh capital for the bank.PHOTO: COURTESY

Chase Bank has sold its investment banking arm, Genghis Capital, in a deal that will raise fresh capital for the bank.

Details of the buyout, however, remain scanty with insiders declining to reveal the transaction value of this latest acquisition by Pamoja Capital, a Nairobi-based corporate advisory firm.

Already, the new management led by the new chief executive Geoffrey Gangla, who is also the honorary secretary of the Kenya Rugby Union has moved in to take over Genghis Capital's operation.

He however, could not reveal what the transaction price was, citing that the sale was a private transfer and that the details could only be sanctioned by the Capital Markets Authority.

“We would need clearance from the CMA before sharing any details of the transaction,” Mr Gangla said, only confirming conclusion of the deal subject to the necessary regulatory approvals. Chase Bank has an ultimatum from the Central Bank of Kenya (CBK) to recapitalize before the receivership is lifted to guarantee resumption of normal operations of the bank.

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Just last week, CBK allowed Chase bank to resume accepting fixed-term deposits as it nears recovery.

The price paid by Pamoja Capital could be directed to shoring up the cash requirements for the parent company, which also owns the Islamic banking arm, Chase Iman, Rafiki Microfinance, Chase Assurance and until earlier this month Genghis Capital.

ESTIMATED VALUE

Industry players estimate the value of Genghis Capital at about Sh500 million, based on last year’s acquisition of Apex Capital by a Mauritian firm, Axis. The previous owner of Apex Capital, Kassim Bharadia, yesterday confirmed to The Standard that he raised Sh470 million from the deal.

Pamoja Capital has offices in Nairobi and Johannesburg, and describes itself as an independent corporate finance advisory boutique offering financial and transaction advisory services to private and public sector institutions operating in Africa.

“Since inception, we have successfully executed transactions worth $15 billion and are working on new transactions worth $1 billion,” the firm said. The collapse of Chase Bank affected the operations of Genghis Capital, sending shock waves through the industry. It was handling billions worth of investments, causing worries for investors who have put their life savings in the firm.

Most of the funds were held in the bank, significantly hampering its operations and prompting the search for a strategic investor to rescue one of the biggest brokers at the Nairobi Securities Exchange.


Chase Bank BUSINESS NAIROBI
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