Inside Politics

Equity Group acquires 67pc interest in Congolese lender

Wednesday, August 12th, 2020 00:00 |
Equity Group managing director James Mwangi. Photo/PD/File

Steve Umidha @UmidhaSteve

Equity Group has completed the acquisition of a 66.53 per cent stake in Banque Commerciale Du Congo (BCDC), two months after the Kenyan lender pulled out of a similar deal, with London-listed firm Atlas Mara.

The deal, worth $95 million (Sh10.3 billion) now doubles the number of subsidiaries owned by Equity Group in DRC Congo having acquired a German lender, Pro-Credit bank in 2015, now Equity Bank Congo.

Equity Group’s Managing Director and Chief Executive Officer James Mwangi said in a statement Tuesday that the merger will contribute more than 20 per cent of the bank’s total balance sheet with the potential of becoming the largest bank in DRC in 12 months.

“The addition of and amalgamation with BCDC will put Equity Group on the path to become a Sh1trillion balance sheet business, that will benefit from economies of scale because we have the size and countrywide infrastructure that can bring our experience and capability to contribute significantly to the transformation of lives and livelihoods in DRC,” said Mwangi.

Mwangi welcomed BCDC directors and employees to the EGH Group, saying he looked 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.

The acquisition of the lender sits well with Mwangi’s goal of making Equity a leading Pan-African bank with sound footing across the region.

In June this year Equity Group and Atlas Mara failed to pen a reciprocally and friendly deal in which the Kenyan lender was to acquire from the London-listed firm four banks in Rwanda, Zambia, Tanzania and Mozambique because of a Sh9.5 billion dividend pay-out impasse to shareholders.

But people familiar with those talks say there was more to the renouncing of the transaction believed may have been triggered by Equity’s under the table negotiations with Banque Commerciale du Congo, which insiders now reckon was unknown to the representatives from Atlas Mara.

Market value

Atlas Mara was to be paid in the form of Equity shares amounting to a 6.72 per cent stake with a market value of Sh13.6 billion as of January this year which also included a preliminary agreement signed in April — that would’ve given Atlas Mara a 6.3 per cent stake in Equity.

Equity blamed cooling of those talks on the effects of the Covid-19 pandemic globally which it said had hampered the economies in which it operates.

The battle for the control of Banque Commerciale du Congo now in firm control of Kenya’s second largest bank by asset, began in 2013 when former DRC President Joseph Kabila’s family expressed interest in the purchase of George Forrest family – and now marks an end to the country’s first family interest in BCDC with Equity Group on the front seat to become the largest commercial lender in the French speaking nation – another first for Equity Group.

BCDC is one of the largest banks in Kinshasa and is listed on the Brussels stock exchange and majority owned by Belgian entrepreneur George Forrest.

The Kabila family and its allies, operating through an intermediary, first made Forrest an offer for $50 million in 2013 for his family’s shares, according to a report first published by an American an investigative and policy team, the Sentry.

Kabila’s family and his coterie had on several occasions tried to take control of several Congolese banks between 2013 and 2017, when Joseph was still EquityPresident of the Democratic Republic of Congo.

Forest declined. He is quoted saying that he found the offer inadequate and, a deal whose source of funding he felt was suspicious.

Some of the funds, according to Sentry, he felt had been misappropriated from government coffers.

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