Capital Markets

Top corporate deals of 2020

kingdom

Cooperative Bank of Kenya officially acquired 90 percent stake in Jamii Bora Bank on August 21. FILE PHOTO | NMG

brianngugi_img

Summary

  • Some of the recent merger and acquisitions activity cut across key sectors including financial services, renewable energy and technology.
  • This is expected to intensify. Below are some of the top deals for 2020.

Some of the recent merger and acquisitions activity cut across key sectors including financial services, renewable energy and technology. This is expected to intensify. Below are some of the top deals for 2020.

Co-operative Bank acquires Jamii Bora Bank for Sh1bn

Cooperative Bank of Kenya #ticker:COOP officially acquired 90 percent stake in Jamii Bora Bank on August 21.

Co-op Bank had early March opened talks to buy a majority stake in Jamii Bora Bank. The two parties valued the deal at Sh1 billion, which was endorsed by Jamii Bora shareholders marking further consolidation in the East African nation’s banking industry.

Co-op Bank is the country’s third-biggest bank by market share with nearly 10 percent of the domestic market. In the deal, Co-op Bank was issued with 224.1 million new “Class A” shares equivalent to 90 percent shareholding, while the stake of the existing Jamii Bora shareholders were diluted to 10 percent.

Jamii Bora Bank has been renamed to Kingdom Bank Limited and a new chief executive officer appointed in major changes by Cooperative Bank of Kenya.

Co-op Bank’s growth strategy has been more focused on expanding in Kenya as opposed to expanding beyond borders. Outside Kenya, the lender owns 51 percent stake in Co-op Bank South Sudan. It also holds stakes in Kingdom Securities, CIC Insurance #ticker:CIC and Co-op Fleet Africa Leasing Limited.

Egypt's Commercial International Bank acquires Mayfair Bank

Egypt’s largest private lender, Commercial International Bank (CIB), announced this year it would inject Sh3.7 billion ($35 million) into Mayfair Bank following its acquisition of a majority stake in the Kenyan tier three lender.

The acquisition by CIB, which now controls 51 percent shareholding in the bank, will see the lender operate under the new name of Mayfair CIB. CIB was established in 1975 as a joint venture between National Bank of Egypt and Chase Manhattan Bank.

CIB is Egypt’s leading private-sector bank and is listed on the Cairo Stock Exchange, the London Stock Exchange and the New York Stock Exchange.

The lender has a network of over 200 branches in Egypt, two representative offices in Dubai (United Arab Emirates) and Ethiopian capital Addis Ababa. Mayfair is Kenya’s fourth-smallest lender with a market size index of 0.17 percent as at February, according to CBK data.

The bank was licensed in June 2017. Its losses rose 37 percent last year to Sh365.9 million, making it one of the few lenders to post losses in Kenya’s banking market of 43 banks.

KCB buys two banks in Rwanda and Tanzania in Sh4.3bn deal

KCB Group #ticker:KCB signed a deal with London-listed financial services firm Atlas Mara Limited to buy stakes in it's banking units in Rwanda and Tanzania in a deal valued at Sh4.3 billion.

The proposed transaction will see Kenya’s biggest lender by assets acquire Banque Populaire du Rwanda Plc (BPR) and the African Banking Corporation Tanzania (BancABC).

Under the proposed deal KCB said it will the acquire a 62.06 per cent stake in Banque Populaire du Rwanda Plc and a 100 per cent stake in African Banking Corporation Tanzania.

The KCB deal came months after Equity Bank Group called off its plan to acquire four banking subsidiaries from Atlas Mara Limited in a move aimed at preserving its capital in the wake of the Covid-19 pandemic.

The parties had initiated talks in April last year, but the negotiations targeting Atlas Mara's units in Rwanda, Zambia, Tanzania and Mozambique dragged on until the pandemic hit.

Equity buys DRC's bank for Sh11.1 billion

Equity #ticker:EQTY signed a deal to buy a 66.5 percent stake in BCDC from George Arthur Forrest for $105 million (Sh11.1 billion). Part of the money, Sh2.1 billion, will be kept in an escrow account and will be remitted to the seller over two years provided Equity does not encounter new liabilities in the DRC bank.

Equity said the transaction is aimed at deepening its regional diversification besides enhancing scale in DRC where it already owns another bank (Equity Bank Congo). BCDC made a net profit of Sh800 million in the half-year ended June 2019 when it also held net assets of Sh8.5 billion.

Naivas sells 30 percent stake for Sh6bn to private equity funds

Supermarket chain Naivas raised Sh6 billion from the sale of a 30 per cent stake to a consortium of investors, including the International Finance Corporation (IFC), valuing the retailer at Sh20 billion.

The amount paid in the deal, one of the largest in the regional retail space. IFC, private equity firms Amethis and MCB Equity Fund and German sovereign wealth fund DEG teamed up to acquire the minority stake, with the deal set to fuel Naivas’ expansion across the country.

The breakdown of the stakes held by the institutional investors was not immediately clear. In separate disclosures, however, IFC said it invested $15 million (Sh1.6 billion) while DEG said it provided $10 million (Sh1 billion).

Nepalese billionaire buys Fairmont for Sh2.8bn

Saudi billionaire Prince Al-Waleed bin Talal stake in the troubled Fairmont The Norfolk and Fairmont Mara Safari Club was bought by Chaudhary Group, which is associated with billionaire Nepalese lawmaker Binod Chaudhary.

The deal, estimated at Sh2.8 billion, will be the second deal in the region for the Kathmandu-based multinational which also owns Le Relax Hotel in the Indian Ocean island nation of Seychelles.

Chaudhary Group, which is associated with Binod Chaudhary, a billionaire Nepalese lawmaker, has already listed the two hotels among its string of high-end hospitality investments spread in Asia and the Middle East.

Jubilee Holdings sells Sh10.8 billion stake to German insurer

Jubilee #ticker:JUB sold majority stakes in its regional general insurance subsidiaries to German conglomerate Allianz SE for a total of Sh10.8 billion, marking one of the largest transactions in the industry in recent years.

Allianz will acquire controlling stakes of between 51 percent and 66 percent in Jubilee’s short-term or general insurance units in Kenya, Uganda, Tanzania, Burundi and Mauritius.

Jubilee Holdings will receive Sh7.75 billion while the rest will be invested in the operating businesses. As part of the transaction, Allianz’s subsidiary in Kenya (Allianz Insurance Company of Kenya Limited) will be merged into Jubilee General Insurance Limited, which handles covers for fire, accident and theft.

Safaricom buys Sh385m stake in UK gas company

Safaricom #ticker:SCOM bought a stake in UK firm, Circle Gas Limited at Sh384.6 million, marking its entry into cooking energy business as it continues to diversify revenue streams away from voice business.

The telco discloses in the latest annual report that it completed the transaction last December, giving it 18.96 per cent of the issued shares of the England-based firm. Circle Gas has a local subsidiary, M-Gas, with which Safaricom started working with last January.

The telco did not, however, disclose the deal at that time.

Leapfrog acquires 24.1 percent stake in ICEA for Sh2.4bn

ICEA Lion Insurance Holdings, which is controlled by the family of the former Central Bank of Kenya governor Philip Ndegwa, sold a 24.1 percent stake to private equity firm Leapfrog Investments in a deal valued at Sh2.4billion.

Leapfrog is using its investment vehicle Eastern Africa Holdings Limited for the buyout that valued the ICEA Lion Insurance Holdings at Sh10 billion.

The Ndegwas, one of the richest families in Kenya, have proposed or completed five disposals and mergers in the past five years, including the October 2019 merger of NIC Group and CBA to form NCBA Group.