Equity Group has begun its promised march on Africa with the acquisition of a majority stake in ProCredit Bank, a leading player in the Democratic Republic of Congo’s small business sector.
The $60 million (Sh5.8 billion) deal, which is subject to regulatory approval in Kenya and the DRC, marks the first big step in a plan to enter ten new countries in ten years.
At a press briefing held Tuesday afternoon, company officials announced Equity Group Holdings Ltd has entered into an agreement to acquire 79 per cent of the issued share capital of ProCredit Bank Congo SA (ProCredit).
The stake was held by ProCredit Holding AG & Co. KGaA (PCH), Belgian investment giant BIO and Stichting DOEN (DOEN).
“We are excited about our entry into sub-Saharan Africa’s third most populous country through the investment in a fast growing, well established bank,” said Equity Group MD and chief executive James Mwangi.
“This country is too big to do a greenfield (so) we decided to acquire a bank.”
ProCredit is the seventh largest bank by assets in the market with total assets exceeding $200 million (about Sh20 billion), net assets of $25 million (Sh2.4 billion) and a customer base of over 170,000.
It was established in 2005 and has amongst its remaining shareholders the German Development Bank KfW (12 per cent stake) and the International Finance Corporation (9 per cent).
“We see enormous scope for development,” Mr Mwangi said. “This acquisition dovetails with our Equity 3.0 growth strategy as part of our commitment to deepen banking services and enhance financial inclusion in Africa.”
Earlier this month, Mwangi said Equity plans to expand to the DRC, Burundi, Zambia, Zimbabwe, Malawi, Mozambique, Botswana, Ghana and Nigeria, as well as Ethiopia, currently off limits to any foreign bank.
DRC, which has a population of over 85 million and has been mired in conflict for years, has banking penetration levels of under four per cent, well below the regional average of more than 20 per cent.
Helen Alexander, Manager, ProCredit Holding AG & Co. KGaA said: “ProCredit Holding, DOEN and BIO are proud to have built ProCredit Bank Congo since its foundation in 2005. It has played a pioneering role in serving small and medium-sized enterprises and bringing banking services to DRC in general.
“After evaluating various bids, ProCredit Holdings was clear that Equity Group provided the right strategic fit to support further development.”
Equity Group was advised by Equity Investment Bank as the transaction advisor while Anjarwalla & Khanna acted as the legal counsel.