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It paid Shs347bn for the 66.53% stake in a DRC bank
Kampala, Uganda | ISAAC KHISA | Regional lender, Equity Group Holdings, has completed the acquisition of Banque commercial du Congo, (BCDC) in the Democratic Republic of Congo, further strengthening is foot print on the African market.
This follows a no objection nod from the Central Bank of Kenya, Banque Centrale du Congo and the COMESA Competition Commission and the board approvals of BCDC and EGH, according James Mwangi, the managing director and chief executive officer at Equity Group Holdings Plc.
He said the new acquisition will now be incorporated into the Equity Group Holding’s existing banking subsidiary in the Democratic Republic of Congo, Equity Bank Congo S.A.
“As a result of the completion of the Acquisition, EGH now owns 66.53% of the issued share capital of BCDC, making BCDC its subsidiary,” he said.
He added: “We take this opportunity to welcome BCDC directors and employees to the EGH Group and look forward to working together to provide BCDC’s current and new customers with access to competitive, tailored financial services to improve people’s lives and livelihoods whilst also delivering significant value to our stakeholders.”
BCDC is the second largest bank in the DRC as measured by balance sheet and shareholders’ equity. The DRC government holds 25.53% stake in the bank and the rest is held by other shareholders.
Mwangi said Equity Group Holdings Plc. has paid the majority shareholder—George Arthur Forrest and family—US$95 million (Shs 346.68bn) for the bank’s acquisition, far lower than the US$105million (Shs 383.2bn) earlier agreed in November last year due to the effects of the coronavirus pandemic.
This development comes five years since the regional lender acquired a 85.9 % stake in the ProCredit Bank of the Democratic Republic of Congo (DRC) and the rest held by the German State-owned bank KfW (8.1%) and International Finance Corporation (6%).
Reports indicates that the Equity group Holdings is in negotiation to purchase an additional 7.6% stake held by KfW in Equity Bank Congo.
Coincidentally, Equity Group Holdings announced in June this year that it had failed to agree with Atlas Mara in a deal that could have seen it acquire the latter’s banking units in Zambia, Mozambique, Tanzania and Rwanda.
The Group had planned to acquire 100% shareholding in BancABC of Zambia, Mozambique and Tanzania and a 62% stake in Banque Populaire du Rwanda. Equity Group Holdings is currently banking on the new expansion to grow its incomes to its shareholders.
Profitability
The bank’s latest financial performance shows that the recorded a 14 per cent decline in net profit for the three months to March 31 this year as a result of increased loan loss provisioning to cushion businesses against uncertainties caused by the Covid-19 pandemic. The lender, cross-listed in the East African region saw its net profit fall from Ksh 6.15bn (Shs 205bn) to Ksh5.28 bn (Shs 176.2bn).
The bank’s regional subsidiaries in Uganda, Tanzania, Rwanda, South Sudan and the Democratic Republic of Congo accounted for a combined 26% of the group’s profit, compared with 17% in the same period last year as Covid-19 pandemic continues to hit global economies, paralysing economic activities and pushing households into financial distress.
“The global Covid-19 pandemic has mutated into a global economic crisis, occasioned by a sudden standstill of economic activity as a result of the global lockdown. This has introduced unprecedented uncertainty within the global financial systems prompting us to adopt a conservative approach, fortifying our balance sheet and assuring ample liquidity to support our customers,” Mwangi said.
Last year, the bank recorded 13.8 % increase in net profit to Ksh22.6 billion (Shs754bn) driven by increased interest and non-interest income. The increase in profits from KshsSh19.8 billion (Shs660.6bn) in 2018 came on the back of a 23% growth in its loan book to Ksh Sh366.4 billion (Shs12.2trillion).
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