Institutional investor Arise B.V. has acquired an additional 29 million shares currently worth Sh1.1 billion in Equity Group, cementing its position as the largest shareholder in the bank.
Arise had raised its ownership to 481.5 million shares or 12.76 percent as of December 2021, according to the Nairobi Securities Exchange-listed firm’s latest annual report.
The institutional investor, which is backed by Rabobank and sovereign wealth funds FMO and Norfund, had previously maintained an 11.99 percent stake or 452.5 million shares which it acquired in 2017.
Arise acquired the initial shares from NorfinInvest AS, a subsidiary of Norfund which was restructuring its portfolio at the time.
Arise made the additional investment in Equity in a year when it sold a minority stake it held in Rwanda’s Banque Populaire du Rwanda Plc (BPR) to KCB Group.
Equity also owns a subsidiary in Rwanda which is ranked in the country's top five institutions by assets.
Arise’s increased investment in Equity came ahead of the entry of the International Finance Corporation (IFC) which recently completed its purchase of a 6.7 percent stake in the Kenyan banking multinational.
IFC bought the stake from insurance group Britam Holdings at a cost of Sh13.9 billion, making it the second-largest investor in the lender.
The investments in Equity signal the institutional investors’ increased confidence in the bank’s future growth prospects. IFC is also one of the biggest lenders to the bank.
Equity has grown to become the country’s largest bank by assets and net income. It is also the most profitable as measured by profit generated from shareholder funds, also known as return on equity, at an annualised 27.2 percent in the first quarter ended March.
The company, which has expanded aggressively in the regional banking business, is now eyeing the insurance market.
Equity grew its net profit 33.7 percent in the first quarter ended March on the back of higher interest income. The bank reported a net income of Sh11.5 billion in the review period, up from Sh8.6 billion a year earlier.
Total interest income climbed 31.1 percent to Sh26.6 billion as both the loan book and investment in government debt securities expanded.
The bank’s lending to customers rose 27.8 percent to Sh623.5 billion while its holdings of government bonds and T-bills increased by a similar margin to Sh233.9 billion.
Non-interest revenue –largely generated from fees and commissions—rose 9.67 percent to Sh11.91 billion.