Tanzanian investors under the M Holdings Group gunning for a maximum 51 per cent stake in Oriental Commercial Bank intend to change the lender’s name to M-Oriental.
In a notice for Oriental annual general meeting — expected to approve the deal — scheduled for June 25, the bank has valued the deal at Sh1.268 billion going by a share price of Sh30.
This is the first significant entry of Tanzanian investors in the competitive Kenyan banking industry.
“Having received the approval of the Central Bank of Kenya and the registrar of companies, the name of the company (will) be with effect from completion of the allotment and issuance of the shares to M Holdings Limited changed from Oriental Commercial Bank Limited to M-Oriental Bank Limited,” said Oriental bank in the AGM notice.
“On payment of the subscription price of Sh30 per share by M Holdings Limited, the directors be and are hereby authorised to allot and issue to M Holdings 42,281,893 ordinary shares in the capital of the company.”
Approval of the sale by shareholders will give M Holdings power over the appointment of the bank’s managing director and some other full time directors.
M Holdings will also approve the allotment of additional shares, dividends, and capital or liability expenditure exceeding Sh10 million.
Additionally, disposal or acquisitions will need the nod of the Tanzanian buyer, as will signing of contracts worth above $25,000 (Sh2.45 million).
M holdings, once it attains a 10 per cent holding in Oriental, will get to appoint three directors at Oriental, and with a 51 per cent holding it will appoint four directors.
This effectively gives the Tanzanian investors control of the board, given that among the proposals to be tabled at the AGM is one reducing the number of board members from eight to seven.
M Holdings is owned by various shareholders of Bank M Tanzania, which is ranked among the top 10 banks in Tanzania. Bank M, which focuses mainly on corporate and investment banking has 15 shareholders with Vimal Mehta listed as its largest shareholder with a 16 per cent stake.
Mr Mehta is the chairman of Negus group of companies which formerly held a controlling stake in Serengeti Breweries. Nine of its shareholders are listed as individuals with the rest institutions.
Oriental Commercial Bank is classified as a small lender by the CBK and was formerly Delphis, formed from the ashes of BCCI.
The lender’s profit last year dropped 49 per cent to Sh72 million, weighed down by higher interest expenses and reduced income from transactions.