The Kenya Deposit Insurance Corporation (KDIC) has rejected a controversial bid by a Canadian private equity firm that proposed to take over the collapsed Imperial Bank’s assets and to be paid for doing so.
Toronto-based Amassment Corporation wrote to KDIC, an affiliate of CBK, which is managing Imperial, on September 25, 2019.
Amassment, which describes itself as a distressed debt investor, said it would be the sole holder of ordinary shares of a new company that will take over Imperial’s deposits and loans estimated at Sh49 billion.
Depositors were to be given preference shares in the company, representing their full claims. The shares were to earn an unspecified amount of dividends over the years from loan recoveries.
KDIC was also asked to contribute cash capital into the company equivalent to a fifth or the entire sum claimed by depositors.
Amassment was to retain a portion of the company’s profits to ensure its financial strength and to fund future loan acquisition opportunities.
“We believe this structure creates a win-win situation, is the best solution available, covers the entire remaining deposits and assets of Imperial Bank, and the most efficient and beneficial option possible for depositors and KDIC,” the PE firm said in the rebuffed offer.
KDIC initially wrote to Amassment, saying it would study the offer before formally rejecting it on November 7.
The agency says the PE firm’s terms are unacceptable, adding that the law does not allow the sale of a collapsed bank’s assets to a non-bank company.
“We have written to them. They don’t meet the profile of an investor we are looking for,” KDIC’s chief executive Mohamud Ahmed told Business Daily.
“We have tried doing due diligence on them but we think we still don’t know the institution very well. How can we give them money to buy the imperial bank assets?”
In its offer, which lapsed on October 1, Amassment said it would be flexible on the terms of its proposition. KDIC continues to manage a substantial part of Imperial’s assets and liabilities, having earlier reached an agreement to transfer Sh4 billion of the collapsed lender’s deposits to KCB Group.