Old Mutual has bought a 67 per cent controlling stake in Faulu Kenya, paving its quest to join Kenya’s lending space and intensify financial competition.
The deal involves immediate injection of Sh2.8 billion of the Sh3.6 billion agreed price, after successful fulfilment of all required regulatory approvals and closure of the transaction.
Johannes Gawaxab, Old Mutual’s managing director, says the process will deliver significant mileage in its efforts to expand distribution and product proposition in the region.
“This marks yet another milestone in our East Africa growth story. I would like to commend the teams for demonstrating patience and diligence throughout this long but necessary process” he said.
The Faulu deal forms part of the Sh43.2 billion set aside by the South-African financier for its African expansion.
Central Bank of Kenya, the banking regulator, ranks Faulu the second largest Deposit-Taking Microfinance (DTM) after Kenya Women Finance Trust.
Established in 1991, the DTM has grown to 31 banking branches in 44 counties and services over 400,000 customers.
The move means that Faulu has met the regulator’s requirements of a diversified ownership and which bar investors who are not banks, foreign finance companies or the government from owning more than a 25 per cent of local banks.
This concludes a two-year divestiture process that has seen Faulu engage over 20 potential financial partners as suitable investors.
“The injection will enable Faulu Bank to expand banking services and insurance products to more Kenyans who are financially excluded in the micro, small and medium enterprises space,” said its managing director, John Mwara.