British firm gets veto power in I&M

UK-based CDC Group is set to have veto powers in I&M Holdings after its quest to acquire a 10.68 per cent stake in the Kenyan banking group was approved by the competition regulator.

CDC, a government-owned agency, will have the authority to reject decisions it is opposed to in the bank where it will become the fourth largest shareholder with a minority stake after buying out European funds DEG and Proparco.

The Competition Authority of Kenya (CAK), through the latest Kenya Gazette, has now given the greenlight for the private transaction that will see CDC assume the unspecified veto powers.

“The CAK has authorised the proposed acquisition of a minority stake of approximately 10.68 per cent of the issued shares in I&M Holdings by CDC Group together with certain veto rights,” Wang’ombe Kariuki, authority’s director-general said in the notice.

“While the CDC will have control over some affairs in the bank, the authority believes this control will not impact competition negatively hence our approval,” Mr Kariuki told the Business Daily in an interview. Some of the veto powers seen in corporate Kenya, which are outlined in articles of association, include say over appointment of executives.

Veto powers may also extend to control of strategic decisions such as issuance of

shares, capital-raising initiatives, acquisitions, capital expenditure or change in business model.

Following the transaction, CDC will join the list of I&M top owners led by Minard Holdings (22.51 per cent), Tecoma Limited (19.31 per cent) and Ziyungi Limited (18.74 per cent), all of them being longstanding institutional investors. It is not clear which specific rights CDC has secured over its fellow shareholders in the Nairobi Securities Exchange-listed banking group.

The move to grant CDC the special powers however signal the value existing shareholders attach to the fund’s entry.

Technical expertise

Besides the ability to provide new funds to help the bank grow, CDC also has technical expertise in a wide range of sectors including financial services in multiple markets.

The fund, for instance, has provided billions of shillings in medium term debt to local banks like Equity and Co-operative Bank.

“We are highly flexible in the way that we approach opportunities to provide capital by working to meet the needs of each business,” CDC says on its website.

“As an example, our value add might be in the form of patient capital – we often look at periods of 10 years or more.”