City Trust shares gain 9pc after I&M deal

Shares of investment firm City Trust gained the most during Monday’s trading at the Nairobi Securities Exchange, after announcing the conclusion of a deal with I&M Bank.

The two companies announced they had concluded negotiations which would see City Trust become the holding company of I&M Bank.

(Read: Talks on City Trust buyout of regional bank set to drag on)
City Trust’s shares rose 8.94 per cent after the announcement, closing at Sh390 from Sh358 after only 200 shares were traded.

The rise makes City Trust counter the third most expensive stock after BAT Kenya and Limuru Tea which did not have any trades on Monday, but whose previous prices were Sh492 and Sh430 respectively.

In a notice to shareholders Monday, the investment firm said that it had concluded negotiations with I&M Bank where shareholders in I&M Bank will exchange their shares for City Trust shares.

It said the transaction had been approved by the Capital Markets Authority and the Competition Authority of Kenya.

City Trust said that any required exemptions from the Central Bank of Kenya would be gazetted following shareholder approval, and that detailed information on the transaction would be provided in a circular to all shareholders on January 21, 2013.

“On completion of the transaction, City Trust will become the holding company of I&M Bank. There will be no change in the operations of I&M Bank and will continue with its banking business,” said I&M Bank in a statement.

I&M Bank, which was ranked the seventh largest in the country in terms of assets as at the end of 2011 by the Central Bank of Kenya, opened a branch in Tanzania last year and owns 50 per cent of Bank One in Mauritius.

In July this year, it also announced that it had entered the Rwanda market with the acquisition of a majority shareholding in Banque Commerciale du Rwanda (BCR).

Read: I&M buys majority stake in Rwanda’s second largest bank)

London based private equity fund Actis sold its stake in the Rwanda lender to a consortium of which included I&M Bank and French and German development finance institutions, Proparco and DEG.

In the half year to June, I&M Bank said that its profit after tax rose by 4.7 per cent to Sh1.77 billion from Sh1.69 billion as at the end of June 2011.

The contribution of Kenya’s operations to profit after tax was Sh1.55 billion having dropped to 87.76 per cent as at June 2012 from Sh1.52 billion or 90.01 per cent as at the end of June last year.