Kenyan small lender Credit Bank is looking to expand to other countries in the region after signing a multi-billion-shilling deal with private equity investor Equator Capital Partners.
This follows the bank's shareholders approving a deal earlier this week that will see Equator Capital Partners acquire a 20 per cent stake under its new fund Shorecap III LP.
"We are looking at this in terms of strengthening the bank's capital as it will improve competitiveness and bolster the bank's ability to serve its customers better," said Credit Bank Chief Executive Betty Korir.
"Behind the partnership are people like the African Development Bank, AfDB and European Investment Bank (EIB), who have big financial muscle, so they are not only bringing in cash, but they are also coming in with technical support to help us move forward, work on our systems, credit and a few other solutions that we have."
In April this year, the Central Bank of Kenya (CBK) gave the green light for the acquisition of 20 per cent of the shareholding of Credit Bank by Shorecap III LP.
Shorecap III LP is a private equity fund managed by Equator Capital Partners registered in Mauritius.
Its shares are held by Shorecap III GP Ltd, African Development Bank Group, CDC Holdings Guernsey Ltd, European INvestment Bank, KfW Development Bank and Oesterreichische Entwicklungsbank AG (OeEB).
Credit Bank management has not revealed the financial value of the deal.
But according to the lender's latest financial report, Credit Bank held 75 million ordinary shares of Sh100 each, putting the value of the bank at Sh7.5 billion.
This means the value of Shorecap III LP's 20 per cent acquisition is at least Sh1.5 billion.
Credit Bank was established in 1986 as Credit Kenya Ltd before being granted a commercial banking license in 1994 and the bank has grown steadily through the years, with total assets rising from Sh10.2 billion in 2015 to Sh25.81 billion reported last year. The bank is categorised as a tier-three lender with 55,000 customers, 216 staff and holds a 0.5 per cent market share in Kenya's commercial banking sector with 17 branches.