Stanbic Bank Kenya earned close to Sh1 billion revenue from the transaction in which British multinational Diageo acquired an additional 14.97 percent stake in East African Breweries Plc (EABL).
Joshua Oigara, the chief executive for Stanbic Bank Kenya and South Sudan, said in an interview the Diageo deal, which was midwifed by SBG Securities, a wholly-owned subsidiary of Stanbic Bank Kenya, was a “very significant” transaction for the group in the year ended December 2023.
“That was one of the single largest transactions done in Kenya’s capital market history. That brought in a lot of fees and revenue. The bank generated almost Sh1 billion from this transaction,” said Mr Oigara.
Offer documents listed Stanbic Bank and its investment banking subsidiary SBG Securities as the financial advisers in the Diageo deal. Stanbic was also the paying bank, and SBG the sponsoring broker and lead acceptance agent.
Diageo bought 118.394 million shares at a unit price of Sh192 in the oversubscribed offer, valuing the deal at Sh22.7 billion. This raised its stake in the brewer to 65 percent from 50.03 percent. The deal raised the profile of SBG Securities as the top broker in Kenya with a market share of 40.6 percent at the end of last year, according to Stanbic.
Thanks to the deal, SBG Securities rose from a Sh1.87 million net loss posted in the year ended December 2022 to a net profit of Sh149.72 million last year.
“A big part of this is due to this one big transaction that was completed in 2023,” said Dennis Musau, the chief financial and value officer at Stanbic Bank Kenya.
SBG’s brokerage commission more than doubled from Sh96.59 million to Sh118.16 million while advisory or consultancy fees grew 5.3 times from Sh34.84 million to Sh183.62 million. The two revenue lines lifted total income from Sh179 million to Sh411.6 million.
The Sh149.72 million net profit dwarfs the Sh121.85 million net earnings that SBG posted in the year ended December 2019 when it was the sponsoring stockbroker and lead acceptance agent in the multibillion-shilling deal in which KenolKobil was acquired by French firm Rubis Energie.
SBG performance added to that of other subsidiaries, lifting Stanbic Holdings net profit for last year by 34 percent to Sh12.2 billion. Stanbic Bank Kenya net earnings grew 30 percent to Sh11.5 billion while Stanbic Bancassurance Intermediary net profit rose by 93 percent to Sh214 million.
Stanbic becomes the first lender to release its 2023 full year results, with others expected to do so before the end of the month.
Central Bank of Kenya data shows Kenya’s banking sector pre-tax profits for last year dropped by 7.3 percent to Sh226.3 billion from Sh244.1 billion a year earlier.
