Peter Kenneth, 31 investors to get Sh5bn in Mayfair Bank saleTuesday January 31 2023
Politician Peter Kenneth, lawyer Ambrose Rachier and city tycoon Amos Gichuki Ngonjo are set to receive $40 million (Sh4.98 billion) for the sale of their remaining stakes in Mayfair Bank to Egypt’s Commercial International Bank (CIB).
The three are among the 32 investors who have agreed to sell their combined 49 percent stake in Mayfair to CIB, which in April 2020 also paid $35.35 million (4.4 billion) to get a 51 percent stake.
Mr Kenneth, the founder of Mayfair Group which started as Mayfair Insurance, is among the investors who teamed up in 2017 to establish the bank that targets large and medium-sized firms and high-net-worth individuals.
CIB has taken full ownership of Mayfair Bank after offering funds, skills and infrastructure to turn around the Kenyan lender from a loss of Sh379.2 million in 2020 to a profit of Sh357.5 million in the nine months to September.
The deal has offered Kenyan investors a platform to cash in on their investments in a transaction that values the bank that accounted for only 0.26 percent of the country’s banking market at Sh10.2 billion.
Shareholders at Mayfair Bank reckon that Mr Kenneth has an interest in the lender through a layer of nominees firms that make it difficult to find his name in official records at the Business Registration Service.
Besides CIB with a 51 percent stake, the rest of the top seven shareholders are companies and nominee accounts whose ownership ranges between 3.69 percent (Plus Two Five Four) and Master Holdings with a stake of 2.33 percent. Mayfair Insurance held 2.45 percent stake.
“CIB is pleased to announce that the Central Bank of Egypt (CBE) and the Central Bank of Kenya (CBK) have granted the bank their consent to acquire the remaining 49 percent of Mayfair CIB to become a fully owned subsidiary of the bank, for a total transaction value of $40 million,” said CIB in a disclosure in Egypt.
The deal, which takes effect today, also offers a window for Mayfair Bank founding shareholders to make a return on their investment, having endured losses for four years in a row after starting operations in August 2017.
Mr Rachier, the chairman of Kenya's top football club Gor Mahia, had a direct stake equivalent to 0.98 percent while Mr Ngonjo’s ownership stood at 2.33 percent.
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Kalpesh Rasik Patel, a director in Mayfair Bank, will receive Sh109 million for his 2.18 percent stake.
Individual shareholders include Varsani Ramji Devji (2.32 percent), Darshan Chandaria and Neer Chandaria (2.12 percent), Joy Vipinchandra Bhatt (0.98 percent), Priten Bhupendra Patel (0.91 percent) and Sonaar Jayandra Shah and Shital Umankant Khamar (1.39 percent stake jointly owned).
The 32 shareholders agreed on the share purchase agreement with CIB owners on November 23 last year while Treasury Cabinet Secretary Njuguna Ndung’u gave the deal a nod on Tuesday last week.
The new deal means the Egyptian lender has cumulatively spent $75.35 million (Sh9.38 billion) to acquire the Kenyan bank, which now trades as Mayfair CIB.
“We are pleased and grateful for this vote of confidence from the governor and CBK as a whole as we are firm believers in the prospect of the prosperity of the Kenyan economy and look forward to our contribution to the same,” said Hussein Abaza, CIB chief executive.
Kenya’s banking industry has had a flurry of deals in recent years in the wake of increased regulatory scrutiny encouraging consolidation.
Equity Group, the country’s biggest lender by assets, has completed a deal to acquire certain assets of Spire Bank, a distressed smaller institution owned by the teachers’ credit union.
KCB Group bought the distressed National Bank of Kenya while Cooperative Bank acquired the troubled Jamii Bora Bank.
CIB is the first Egyptian bank to venture into the Kenyan market, and bets on using the operation as the launching pad to the East African market.
It also wants to position the local unit as a key bridge between East Africa and Egyptian businesses in the wake of rising trade between Cairo and the region.
“The acquisition will anchor CIB’s expansion into the East African region. Additionally, it will strengthen the trade and investment ties between Kenya and Egypt,” the Kenyan central bank said.
The Egyptian bank has indicated that its strategy for Mayfair CIB will hinge on trade finance activities and digital banking solutions, particularly growing the Egypt-Kenya trade corridor.
CIB, which is the top private bank in Egypt with an asset base of about $19.8 billion (Sh2.46 trillion), wants to support Egyptian large corporates and SMEs to do more business in the Eastern Africa hub.
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“Kenya offers great opportunities, and we are excited to be part of the country’s business life and future. We will grow this bank as we continue to provide a first-class service to all our clients,” said Hossam Rageh, executive director at Mayfair CIB.
It has five branches spread out in Nairobi, Eldoret and Mombasa.