The International Finance Corporation (IFC) has more than doubled its total investment in Equity Group to Sh52.8 billion after making additional loans and share purchase in the lender since the beginning of 2021.
Equity said in its latest annual report that total borrowings from IFC — the World Bank’s private investment arm — rose to Sh38.9 billion by the end of last year from Sh21.8 billion in 2020.
The borrowings consisted of Sh33.3 billion worth of facilities advanced to Equity Bank Kenya, and Sh5.6 billion the institution advanced to Equity BCDC, the lender’s subsidiary in the Democratic Republic of Congo.
On top of the additional lending, the IFC also bought a 6.7 percent stake in Equity Group in April this year from insurance firm Britam Holdings, paying Sh13.9 billion for 253.1 million shares.
Britam made the sale partly due to a need to diversify its portfolio and also to comply with regulatory guidelines that cap investment in a bank at 10 percent of an insurer’s total assets.
This share purchase deal made the multilateral lender Equity’s second-largest shareholder behind Arise B.V., an Africa-focused investment company that holds a 12.76 percent stake in the bank.
Arise B.V., which is backed by Rabobank, sovereign wealth fund Norfund and Dutch development bank FMO, raised its stake to the current levels last year after acquiring an additional 29 million shares in Equity.
It had previously maintained an 11.99 percent stake or 452.5 million shares, which it acquired in 2017.
The IFC’s enhanced debt and equity injection into Equity has come at a time when the lender has been turning to development finance institutions (DFIs) to back aggressive regional expansion.
In May this year, Equity received a $165 million (Sh19.4 billion) subordinated loan from the IFC and other DFIs to support micro, small and medium-sized businesses.
IFC’s contribution to this new funding amounted to $50 million (Sh5.88 billion), with a similar amount coming from British International Investment.
The IFC loan will, however, not add to its already existing debt exposure in Equity, due to the maturity of a Sh5.66 billion facility at the end of this month that effectively makes the new funding a rollover of existing debt.
The remaining $65 million was sourced from institutional investors Symbiotic, ResponsAbility and FMO.
