Nigeria’s top lender, Access Bank, will acquire majority stake in Sidian Bank from Centum Investments for Sh4.3 billion, two years after it entered the Kenyan market with the buyout of Transnational Bank.
Centum Investments on Tuesday announced a binding agreement to sell 83.4 percent stake in Sidian to the Nigerian lender, which has been on an acquisition spree in Africa.
The deal is the latest in Kenya’s banking sector, where tougher supervision by the central bank and the proliferation of lenders have sparked a consolidation round in the industry since 2017.
Access Bank acquired a 99.98 percent stake of Transnational Bank in 2020 from Close associates of former President Daniel Moi in a deal valued at Sh1.56 billion. Access, which has assets of $25.5 billion, focuses on corporate retail banking and it is expected to boost the growth of Sidian, which will be merged with Transnational Bank that was renamed Access Kenya.
Sidian that started as a non-governmental organisation before converting to a micro-financier in 1989 and later to a bank in 1999, mainly lends to small and medium enterprises (SMEs).
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“Centum Investment Company Plc (‘Centum’) announces today that it has entered into a binding agreement with Access Bank Plc (‘Access Bank’) regarding a proposed purchase by Access Bank of Centum’s entire equity stake in Sidian Bank Limited,” Centum’s CEO, James Mworia, said in a statement to newsrooms.
“It is expected that in due course, Sidian will be merged with Access Bank’s subsidiary in Kenya to create a stronger banking institution positioned to serve the Kenyan market,” he said.
The Nigerian lender has closed several buyout deals in Africa recently, including the acquisition of South Africa’s Grobank and loss-making Cavmont Bank from the Zambian arm of Namibian financial services group Capricorn.
It became Nigeria’s biggest lender last year, a status it achieved after it acquired rival Diamond Bank in a $235 million deal that it said was meant to create Africa’s largest bank by customers.
Access acquisition of Sidian marks Centum’s exit from Kenya’s lucrative financial services market after buying the majority stake in then K-Rep Bank in 2014.
Sidian posted a profit of Sh117 million in the three months to March, from Sh113.9 million in the previous quarter.
But the lender has not been able to generate outsized profits and dividends that Centum was eyeing. The Central Bank of Kenya (CBK) ranks Sidian as Kenya’s 23rd bank out of the country’s 39, has remained a tier-three bank since it became a fully-fledged bank nearly a decade ago.
Centum puts its initial investment in Sidian Bank at Sh4.7 billion, meaning the Nairobi bourse listed investment firm has failed to make capital gains from the lender’s share given its sale to Nigerians at Sh4.3 billion.
Access has operations in 12 African countries and Britain as well as representative offices in China, United Arab Emirates, Lebanon and India.
Nigerian lenders have been trying to find new avenues to grow after a slow economic growth at home following a 2016 recession caused loans to turn sour, leaving banks parking cash in government bonds whose yields have now declined.
The CBK said earlier that it expects consolidation in the Kenyan industry to continue, adding that market-driven tie-ups were working.
The all-share acquisition of National Bank of Kenya by KCB Group in 2019 has been touted as one of the biggest deals in the Kenyan sector.
The combined Sidian and Access Bank Kenya operations will create a lender with Sh57.1 billion assets, making it the largest tier-three lender with a loan book of Sh26.6 billion.