East Africa Growth Holdings (EAGH) is set for sweeping powers in I&M Group including a say in the hiring and dismissing of senior management and change of dividend policy when it concludes the purchase of new Sh4.19 billion shares.
I&M has convened a general meeting on December 10 where shareholders are expected to endorse a proposal to create and award EAGH 86.5 million ordinary shares at a price of Sh48.42 each and amend the lender’s internal rules.
EAGH, a limited liability company registered in Mauritius with current shareholders as AfricInvest, Norwegian Investment Fund for Developing Countries (Norfund) and Dutch Entrepreneurial Development Bank (FMO), will see its stake in I&M jump to 15.1 percent from 10.7 percent.
The Sh4.19 billion deal will entrench EAGH as the fourth largest shareholder of I&M, with the top three remaining Minard Holdings Limited (20.5 percent), Tecoma Limited (17.5 percent) and Ziyungi Limited (16.9 percent).
The rise in shareholding and the changes in the articles of association will see EAGH have a say in determining the hiring, firing and remuneration of the regional CEO of I&M as well that of I&M Kenya and the group chief operating officer, according to the notice of the general meeting.
This comes after EAGH agreed to subscribe for the additional shares at the price representing a premium of Sh21.64 or 81 percent above the volume weighted average daily price at which I&M shares traded on the Nairobi Securities Exchange between September 18 and October 31 this year.
EAGH will also be entitled to appoint one director and one observer to the board. Several decisions, reserved as key matters, will also require the approval of EAGH.
Matters such as merger of I&M with any other company, change in dividend distribution policy, changes to the articles of association and change of external auditors will all require EAGH approval.
I&M will also have to get the nod of EAGH to enter into any contract valued at more than $1 million (Sh129.5 million). EAGH’s approval will also be needed to adopt the lender’s annual business plan.
EAGH is also going to have a say on I&M’s borrowing if the credit being sought is equivalent to at least 10 percent of the group’s total equity.
Other decisions such as delisting from the stock market, major change in the nature of business and new acquisition or disposal of part of the business will all require EAGH approval.
I&M wants to use the additional equity capital to fund growth. This will include investing in banking and non-banking entities, with some of the specific projects being additional branches in Kenya and the region, boosting capital across subsidiaries and strengthening human capital and IT.
EAGH’s latest transaction follows another one early in the year when it paid UK development finance institution British International Investment (BII) Sh6.5 billion to buy its 10.13 percent stake.
