Ecobank Kenya managing director Kassi Ehouman (left) with former chief Tony Okpanachi at a past function. The lender has been scouting for an investment banking licence to give it access to the lucrative transaction advisory and financing deals. Photo/FILE
What you need to know:
The lender has been scouting for an investment banking licence to give it access to the lucrative transaction advisory and financing deals, especially in the energy and mining sectors.
The investment advisory business would be converted into an investment bank after meeting the Capital Markets Authority’s (CMA) regulatory approvals and the minimum capital requirement of Sh250 million.
Ecobank Kenya has set its sights on obtaining an investment banking licence, following the acquisition of investment advisory firm, Iroko Securities.
The lender has been scouting for an investment banking licence to give it access to the lucrative transaction advisory and financing deals, especially in the energy and mining sectors.
Ecobank Kenya CEO Ehoumann Kassi said that the investment advisory business would be converted into an investment bank after meeting the Capital Markets Authority’s (CMA) regulatory approvals and the minimum capital requirement of Sh250 million.
“We’ve (some) approvals left to cover. The investment bank unit should be up and running by September,” he said.
On Friday last week, the Competition Authority gave approval to Ecobank’s bid to acquire Iroko Securities, which appeared to be a compromise for the lender whose former CEO Tony Okpanachi had said was seeking to acquire an investment bank.
“The Competition Authority authorises the acquisition of 100 per cent of the issued shares of Iroko Securities (Kenya) Limited by Ecobank Development Corporation,” said Competition Authority director-general Wang’ombe Kariuki in a gazette notice.
Mr Okpanachi had said in December that the preference for getting into investment banking would be through acquisition rather than by starting its own unit from scratch.
Ecobank is betting on recent oil and gas discoveries in the region to broker new investments in the energy sector, especially exploration and infrastructure projects with significant capital inflows.
The bank will be eyeing fundraising deals, stock sales and rights issues, syndication deals, and other debt issues.
With the setting up of an investment bank arm, Ecobank is set to join the likes of Standard Chartered and CFC Stanbic, which have similar models.
The bank will also be well placed to build on the advantage of taking over a company that has a range of international contacts and experience in the African investment market.
Iroko Securities Kenya is licensed by the CMA as an investment adviser, and is a subsidiary of London based Iroko Securities Limited, which is an African focused fixed income securities firm.
It offers investment services to international investors seeking to gain exposure on African credits.
Ecobank is making the acquisition at a time when its earnings have been under pressure, having posted a Sh1 billion net loss in the 2012 financial year compared to a Sh202 million net profit in 2011 weighed mainly by costly customer deposits.
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