Credit Bank shareholders to decide on stake sale to US fund

Credit bank along Koinange Street, Nairobi. [Elvis Ogina, Standard]

Credit Bank is seeking shareholders’ nod to sell a 20 per cent stake to a US-based fund.

The bank’s board has called for an extraordinary general meeting on December 13 during which shareholders will vote on whether the lender should finalise the deal with Shorecap Fund.

In 2018, Credit Bank received approval from shareholders to “enter into discussions with potential investors for placement of shares to new investors”. In May this year, the bank said it had signed an agreement with Shorecap III, LP for the sale of a 20 per cent stake.

In a statement yesterday, Credit Bank said shareholders will decide on the fate of the proposed deal during next month’s extraordinary general meeting. “...Shorecap III, LP a limited partnership registered in the Republic of Mauritius… entered into an agreement with the company date May 31, 2022, according to which the investor will subscribe for 7.3 million ordinary shares constituting approximately 20 per cent of the shares of the company,” said Credit Bank.

Private equity

ShoreCap III is a multinational private equity (PE) fund managed by US-based Equator Capital Partners.

The lender, which is linked to the Nyachae family, started operations in 1986 as Credit Kenya Ltd, a non-bank institution. It became a fully-fledged commercial bank in 1995.

The bank has 16 branches dotted across the country and is ranked 26th in size, according to data from the Central Bank of Kenya.

Its total assets grew by 12 per cent to Sh25.97 billion by December last year, up from Sh23.21 billion in December 2020. Customer deposits grew by 15.4 per cent to Sh20.36 billion in December last year from Sh17.64 billion in the previous year.

If given the nod by shareholders, the deal will mark the first transaction in Kenya for ShoreCap III, which has offices in Nairobi, Abidjan, Johannesburg and Chicago in the US.

It will also be the latest major change in the shareholding structure of Credit Bank.