Equity Bank targets full acquisition of collapsed broker

Equity Bank is gunning for full ownership of collapsed stockbroker Francis Thuo and Partners through its investment banking subsidiary.

The lender announced on Wednesday that it is in the final stages of acquiring the “entire” stake of the stockbroker, contradicting an earlier statement by Mike Rubia, a director of the failed brokerage firm.

Mr Rubia had told the Business Daily that Equity would only buy a majority stake and not all shares.

“We are pleased to announce that all conditions to which the agreement are subject to have been fulfilled. The bank is now in the process of concluding the proposed acquisition (of the entire share capital) as well as its admission to the NSE, with a view to launching trading operations as soon as possible,” said Equity’s company secretary Mary Wamae in a statement.

On Wednesday Mr Rubia confirmed that Equity Bank was in the process of acquiring all shares of the collapsed brokerage firm, but declined to explain the apparent change in details of the transaction.

“It is not fully concluded yet,” said Mr Rubia.

The transaction price is said to have been Sh150 million, but neither Mr Rubia nor Equity Bank have confirmed the figure.

Equity Investment Bank is part of the Equity Group, which provides financial services including banking, insurance and brokerage services. It is the second largest lender by market capitalisation of banks listed at the Nairobi Securities Exchange.

“Shareholders of Equity Bank Limited are kindly advised to exercise caution when dealing in the shares of the company,” said Ms Wamae.

Francis Thuo & Partners collapsed in early 2007 under the weight of illiquidity and mismanagement, which resulted from claims for compensation by hundreds of investors who claimed their shares had been sold without their authorisation.

(READ: Equity’s broker licence signals shake up of stock market)

Equity Bank’s purchase of Francis Thuo was concluded amid stiff resistance from some brokers who felt the lender, with its huge agency network and client base, would take away business from them.

The acquisition gives Equity Investment Bank access to NSE’s trading platform.

CBA Capital, a subsidiary of Commercial Bank of Africa, has also recently been admitted as a stockbroker at the NSE.

Equity Bank’s share on the NSE continued to fall on Wednesday for the sixth straight day losing four per cent of its value in the period.

Last Wednesday, when the Business Daily first broke news of the acquisition, the share stood at Sh34.75.

On Wednesday, Equity declined to Sh33.25 on a volume of 2.1 million shares, down from Sh34.00 posted on Tuesday.