Equity buys German fund’s Sh996m Congo bank stake


Equity Centre in Nairobi upperhill. FILE PHOTO | NMG

Equity Group #ticker:EQTY acquired an additional 7.7 per cent stake in Equity Bank Congo (EBC) from German sovereign wealth fund KfW for $9 million (Sh996 million) as part of a strategy to consolidate its banking subsidiaries in the Democratic Republic of the Congo.

This raised its ownership in EBC to 94.3 per cent and marked the latest investment in the subsidiary since the Kenyan banking multinational purchased its initial 79 per cent stake in September 2015 for Sh4.5 billion.

“On November 27, 2020, Equity bought shares previously held by KfW in Equity Bank Congo S.A. for a consideration of $9 million (Sh996 million),” the Nairobi Securities Exchange-listed firm says in its latest annual report.

A month later, Equity merged EBC with its second bank in DRC, Banque Commerciale Du Congo (BCDC), in which it had recently acquired a 66.53 per cent stake at a cost of $95 million (Sh10.2 billion).

The merged bank, the second-largest in DRC with an asset base of $3 billion (Sh322 billion), was renamed EquityBCDC.

“Post-merger, Equity holds 75.5 per cent in EquityBCDC with the remainder being held by IFC (International Finance Corporation), the government of DRC and other minority shareholders,” the Kenyan lender says in the report.

The deal with KfW helped the bank to enlarge its stake in the merged entity and underlines its confidence about DRC’s banking prospects.

Equity has now spent a cumulative Sh17 billion in DRC, making it the second most important market after Kenya in which the lender has invested a total of Sh43 billion.

The DRC banking operation was the second most profitable in the year ended December when it reported pre-tax earnings of Sh1.6 billion, representing 7.3 percent of the group’s total of Sh22.1 billion.

Banks in DRC derive most of their revenue from commissions rather than lending, according to earlier disclosures by BCDC.

The lender made the equivalent of Sh5.6 billion in the form of commissions on transactions including foreign exchange trades in the year ended December 2019.

This accounted for 46.6 percent of the total income of Sh12 billion over the same period.