KCB Group makes U-turn on full buyout of DRC bankThursday February 23 2023
KCB Group has retreated from an earlier plan of buying the remaining 15 percent stake in DRC Congo’s Trust Merchant Bank (TMB), citing the need to ride on the expertise of founding shareholders.
The lender, which in mid-December last year acquired an 85 percent stake in TMB, had planned to let the existing shareholders continue holding the balance for at least two years and then move to buy them out fully.
Now KCB Group chief executive Paul Russo says the lender will instead leave the founding shareholders —Robert Levy (13 percent), Oliver Meisenberg (one percent) and the estate of Augustin Kabila Kisole (one percent)— to remain in the subsidiary’s ownership list.
Read: KCB to buy DRC-based Trust Merchant Bank
Mr Russo explained that DRC is a totally new market for KCB and retaining investors who have been there for long will help build a partnership to grow the subsidiary’s value much faster.
“We want partners who understand that market to stay on with us. That is deliberate. It is not that the 15 percent is not available,” said Mr Russo in an interview with the Business Daily.
“We have partners who were in this bank for a long time and they were running it very well. And we want to continue to work with them to build value. We believe they also see the value of working with us.”
The KCB-TMB agreement gave the Kenyan banking multinational the right to acquire the stakes held by the minority shareholders at any time after the second anniversary of the completion of the sale of shares agreement.
KCB also holds the first right of refusal to buy out minority interests.
The right of first refusal clause means that shareholders of the 15 percent stake must first offer the stake to KCB and only sell to any other party if the Kenyan lender declines to buy.
TMB is one of DRC's largest banks, with over $1.7 billion (Sh214.4 billion) in total assets and rides on 109 branches to command about 11 percent market share.
Prior to the KCB deal, Robert Levy owned 88.4 percent followed by Augustin Kabila Kisole (5.5 percent), Oliver Meisenberg (five percent) and Alexandre Maindeiro with 1.1 percent.
Read: KCB to finalise purchase of Congo lender by year end
KCB is yet to disclose the actual value of the deal but previously said the purchase would be priced at 1.49 times the book value or net assets of the DRC lender, working out to about Sh17.9 billion given that TMB net assets were Sh14.15 billion at the end of December 2021.