KENYA – Financial services holding company KCB Group will spend a total of US$56 million to acquire two banks in Rwanda and Tanzania from London-listed Atlas Mara limited.
The Nairobi Securities Exchange-listed lender had earlier estimated it would acquire a 62 percent stake in Banque Populaire du Rwanda Plc (BPR) and a 100 percent ownership in African Banking Corporation Tanzania Limited at a cost of US$40 million.
The amount has increased after KCB sought to make a full buyout of the Rwandan bank by making an offer to its minority shareholders who hold a combined 38 percent stake.
“The group has made an offer to the remaining shareholders of BPR for the acquisition of the remaining stock at the same terms as Atlas Mara’s to raise its ownership to 100 percent,” KCB said in its latest annual report.
“Once approved, the aggregate completion consideration that would be payable by KCB for acquisition of the combined assets is estimated at current values and exchange rates to be US$56 million.”
Atlas Mara is selling its African banks to KCB and other lenders to raise funds to pay its creditors, some of whom have launched liquidation proceedings against the multinational that was the brainchild of former Barclays Plc’s chief executive Bob Diamond.
KCB says the acquisitions reflect its strategy of expanding its operations in the regional market.
Big banks led by KCB, Equity, I&M and DTB have been deepening and expanding their presence in the region in pursuit of growth and diversification.
I&M completed the acquisition of a 90 percent stake in Uganda’s Orient Bank Limited in April 2021 a deal in which it spent US$37 million.
“The group has made an offer to the remaining shareholders of BPR for the acquisition of the remaining stock at the same terms as Atlas Mara’s to raise its ownership to 100 percent”KCB
Equity Bank also acquired Barque Infomercial Du Congo (BCDC) of the Democratic Republic of Congo
Uptake of financial services in the neighbouring countries are lower than Kenya, signalling future growth opportunities.
The ability to offer seamless services to clients across multiple markets is also seen as advantage in attracting and retaining multinationals.
KCB currently has banking units in Kenya, Tanzania, Uganda, South Sudan, Rwanda and Burundi. The units being acquired from Atlas Mara in Rwanda and Tanzania will be merged with KCB’s existing operations in those markets.
“It is our intention to integrate these new acquisitions into the group over the next 12 months,” KCB said.
The bank says it is at an advanced stage in obtaining the approvals necessary to conclude the transactions, part of which will be approval from its shareholders at the May 27, 2021 annual general meeting.
Despite increased investment in regional expansion, Kenyan banking multinationals still derive the bulk of their earnings from the local market.
KCB’s Kenyan operations, for instance, raked in a net profit of US$163.7 million or 89.3 percent of the total US$183.4 million in the year ended December 2020.
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