ECB sells off office block ahead of Mwalimu takeover

Equatorial Commercial Bank (ECB) has transferred its prime office complex to Fidelity Shield Insurance as it prepares to sell a 51 per cent stake to Mwalimu Sacco.

ECB, majority-owned by billionaire Naushad Merali, in a notice said it is offloading Equatorial Fidelity Centre, valued at Sh414.5 million, to Fidelity Shield where it owns a 23.86 per cent stake. The two firms share directors.

Mwalimu Sacco chief executive Robert Shibutse served as a director at Fidelity Shield Insurance and previously sat on the board of ECB.

Businessman Abdulali Kurji, who owns Meridian Hotel, serves as a non-executive director at both ECB and Fidelity Shield. The bank said the transaction will be completed by the end of the year.

The high-end office block, located off Wayaki Way in Nairobi’s Westlands district, has been serving as the corporate headquarters for both ECB and Fidelity Shield.

“Notice is hereby given under the Transfer of Business Act Cap 500 that the property rental business of Equatorial Commercial Bank Ltd at the commercial building known as Equatorial Fidelity Centre will be transferred on or about December 31, 2014 to Fidelity Shield Insurance Ltd,” ECB said in a notice last Friday.

Efforts to reach Mr Shibutse to comment on the sale were unsuccessful as he did not respond to our calls and text message.

The prime commercial building was a source of rental income for ECB and its disposal will see Mwalimu Sacco acquire a bank with less assets.

READ: Mwalimu Sacco seeks 50pc of Merali bank

ECB, in its latest annual report, revealed that it had placed Equatorial Fidelity Centre in the market for sale but did not disclose the reason.

“This property has been placed on the market and sale is expected within the 2014 financial year,” ECB said in its 2013 report.

The asset transfer comes at a time when Mwalimu Sacco is in talks to acquire a 51 per cent stake in ECB in a deal valued at about Sh2.5 billion. The plan to dispose of the property is the latest twist in the tale.

Recently, the Sacco Societies Regulatory Authority (Sasra) regulator and the government opposed the deal.

ECB last week held an extraordinary general meeting (EGM) to clean up its share register ahead of ceding a majority stake to the giant teachers’ credit union.

The meeting saw shareholders approve a proposal to convert 600 million special class ‘‘A’’ shares into 120 million ordinary shares as part of a plan to make ECB’s shareholding open and simplify the transaction.

The government last month froze the ECB-Mwalimu Sacco deal pending a fresh audit into the feasibility of the buyout, valuation of the bank, profitability and corporate governance at the small lender.

Sasra opposed the transaction and faulted Mwalimu for pursuing the ECB deal without either notifying it or seeking regulatory approval.

“You are called upon to furnish this office with the due diligence report and feasibility study report on the said Equatorial Commercial Bank,” the ministry said in a letter signed by Patrick Musyimi, commissioner for Co-operative Development.

“In addition you should not make any financial commitment on the investment before getting approval from this office and Sasra,” said Mr Musyimi in a letter dated September 25 and seen by the Business Daily.