American credit bureau company makes a comeback

Credit reference bureau firm TransUnion is making a comeback into the Kenyan market by buying a majority stake in regional firm CRBAfrica, four years after exiting.

Grant Phillips, TransUnion’ s chief executive officer for Africa region, yesterday said the deal is just awaiting regulatory approval.
“TransUnion has entered into a conditional agreement to purchase an 85 per cent majority shareholding of CRB Holdings, the holding company of CRBAfrica.” said Mr Phillips.

He, however, declined to disclose the transaction price.

Mr Philips said that as soon as the regulators approve the deal then CRBAfrica — which is locally owned — would become part of the TransUnion Group, a private company which is 51 per cent owned by a private equity fund and 49 per cent owned by a family equity fund.

TransUnion, which was founded in 1968 has its headquarters in Chicago and provides services to businesses and consumers in 23 countries, would now have access to Kenya, Mozambique, Malawi, Rwanda, Tanzania, Uganda and Zambia through the acquisition. It already operates in South Africa, Namibia, Botswana, Zimbabwe and Swaziland.

“This acquisition will enable TransUnion to expand its footprint into a number of countries,” said Mr Phillips.

The acquisition comes as the Central Bank of Kenya (CBK) is pushing for the use of credit histories as collateral to determine the cost of loan to individuals and businesses, a move that is bound to guarantee credit reference bureaus business.

At the time of TransUnion’s exit, banks were not authorised to share borrowers’ credit histories with the bureaus.
The CBK in April this year licensed the second bureau, Metropol CRB to offer the banking sector credit information sharing services.
CRBAfrica was licensed in February last year.

Sam Omukoko, chief executive of credit reference company Metropol East Africa yesterday told the Business Daily that business had been slow but had “steadily started increasing” especially as the major banks adopt the use of the reports in their analysis. “Smaller banks still have a challenge because they serve a niche market and they know their customers,” said Mr Omukoko.

He, however, said that business is expected to improve as other banks and companies join in and the use of credit referencing takes root.

Credit information sharing, which is co-ordinated by the Kenya Credit Information Sharing Initiative was rolled out in July last year and banks started submitting credit information to the licensed credit reference bureau the following month.

Central Bank governor Njuguna Ndung’u this month at the financial regulators’ retreat in Mombasa said that more than 900,000 reports on customers and on credit applicants had been requested by banks as at the end of August since roll out a year ago.

In Kenya, however, commercial banks are the only institutions mandated to access credit information, which is limited to negative reports about borrowers.

Consumers and the credit information bureaus have been pushing for the mandating of sharing of positive information and other institutions including utilities have also been pushing to be included in the information sharing.

CRB Africa’s chief executive officer Wachira Ndege said that the acquisition, which will see local shareholders selling out their stakes, will help the company to access technology and expertise while consumers who relocate to other countries where credit referencing is developed will be able to use their credit histories to access credit.

“The market has been pushing for analytics and scoring and we are also trying to introduce automated products where banks can access huge volumes of data,” said Mr Ndege.

He said that TransUnion’s global presence would allow consumers to access their credit histories anywhere the company was operating.

Mr Phillips said that the firm would maintain CRBAfrica’s senior management and staff.