Chinese banks’ interest in Equity signals Kenya entry
Equity Bank chief executive officer James Mwangi. PHOTO | FILE
What you need to know:
Major Chinese lenders have not shown strong interest in taking a stake in the Kenyan banking sector in the past, save for Bank of China Ltd which opened a representative office in Nairobi in June 2012.
Two major Chinese banks sought to buy into Equity Bank as UK private equity fund Helios Partners exited, signalling potential entry into the Kenyan market of Beijing lenders eyeing growing trade with the region.
Equity Bank chief executive officer James Mwangi said at a briefing there was buying interest from China Development Bank, China Construction Bank, Singaporean sovereign fund Temasek and South African pensions and investment fund Public Investment Corporation (PIC).
They, however, took a long time to firm up their bids, according to Mr Mwangi, allowing other buyers to take up the block stakes.
Major Chinese lenders have not shown strong interest in taking a stake in the Kenyan banking sector in the past, save for Bank of China Ltd which opened a representative office in Nairobi in June 2012.
“They had completed their due diligence in the bank, and had lined up investment, but they took a little bit longer to make their decision and all of them missed out on allocation in this fund,” said Mr Mwangi.
“We wanted to close this because it was becoming public knowledge. Such interest shows us, however, that when we need to raise capital it will be easier for us.”
Beijing headquartered China Construction Bank was established in 1954 and is listed on both the Hong Kong and Shanghai stock exchanges. The bank had assets of $2.74 trillion at the end of March this year.
State-owned China Development Bank had assets of $1.65 trillion at the end of 2014, and is primarily responsible for raising funding for large infrastructure projects within China.
Temasek’s net portfolio stands at $266 billion, split on a 55 per cent to 45 per cent basis between developed and emerging economies. Out of its 100 investments across the globe, 28 are in the financial services sector.
PIC, wholly owned by the South Africa government, manages assets worth 1.6 trillion rand (Sh12.7 trillion) across Africa.
Helios 24.99 per cent stake was bought by several institutional investors including Norfund, NorFinance, NSSF Kenya, NSSF Uganda, Genesis Investment LLP, Investec, African Alliance and Renaissance Capital.
Helios received $500 million (Sh52.5 billion) from the sale, having paid Sh11 billion for the same in 2007.
The interest in a Kenyan bank by Chinese lenders comes at a time trade between the two countries has been growing.
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