Equity Group #ticker:EQTY is set to inject additional capital of $100 million (Sh11.5 billion) into its new subsidiary Equity Banque Commerciale du Congo (Equity BCDC).
The funds will strengthen the subsidiary’s capital base as it seeks to scale up its lending and other banking operations in the Democratic Republic of Congo (DRC) where it is the second-largest lender by assets.
The move will raise Equity’s cumulative investment in DRC to more than Sh27 billion, underlining its confidence in the future growth prospects in that market.
Equity chief executive James Mwangi said the new capital would enable the subsidiary to fund projects and trade with investors in DRC.
“To support these investments Equity Group is, in addition, adding $100 million (Sh11.5 billion) to the capital of Equity BCDC,” Mr Mwangi said.
The announcement comes after the DRC was admitted as the seventh member of the regional bloc on March 29 during the virtual 19th Extraordinary Summit of East Africa Community Heads of State chaired by Kenya’s President Uhuru Kenyatta.
The DRC is the sixth biggest export market for Kenyan goods, helped by historical trade linkages and direct air links between Nairobi and the country’s cities.
Equity bought a 66.53 percent stake in Banque Commerciale Du Congo (BCDC) in 2020, having earlier taken over ProCredit in the same market and which it subsequently renamed Equity Bank Congo.
It has since merged the two banks to form Equity BCDC in which it has a majority stake.
Before the merger, BCDC was heavily reliant on commissions including from foreign exchange trades and which generated most of its revenue as lending income came second. The Kenyan banking multinational now wants to increase the combined entity’s capacity to lend.
The DRC operation has become the most profitable for the Nairobi Securities Exchange #ticker:NSE -listed bank.
The lender said that in 2021, the DRC subsidiary contributed Sh4 billion in net profit to the group, which was equivalent to 10 percent of its total net income of Sh40 billion.
This was the highest contribution by a regional subsidiary, ahead of Equity Uganda’s Sh2.6 billion.