Jamii Bora Bank (JBB) shareholders have endorsed Co-operative Bank of Kenya’s #ticker:COOP offer to buy a majority stake in the small lender for Sh1 billion, paving way for completion of the deal.
The shareholders of the bank unanimously backed the proposal in a Wednesday extra-ordinary general meeting that will now see Co-op bank acquire 90 percent stake and get rights to appoint the board to run the tier III lender.
In the transaction, Co-op Bank will be issued with 224.1 million new “Class A” shares equivalent to 90 percent shareholding, while the stake of the existing shareholders will be diluted to 10 percent.
The deal now awaits regulatory approval from Central Bank of Kenya (CBK), Competition Authority of Kenya and the Capital Markets Authority. CBK had in March welcomed the talks saying the deal would enhance stability in the banking sector.
Co-op Bank Group managing director Gideon Muriuki on Wednesday the lender's entry as a strategic investor is an inclusive growth model that will ensure existing shareholders enjoy expected future growth.
“This acquisition will strengthen both institutions in leveraging on the Co-operative Bank’s well-established universal banking model as well as our successful business transformation agenda,” said Mr Muriuki.
He added that Co-op’s 15 million-member cooperative movement and Sh470 billion balance sheet offers the deal the much needed impetus.
The buyout is seen as a fit into Co-op’s business model that already enjoys popularity from cooperative movements and small and medium sized enterprises (SMEs).
JBB’s existing issued 24.9 million ordinary shares of Sh66 each will now be re-designated and re-classified as Class B ordinary shares, giving owners room to share in future profits as opposed to cashing out at once.
Co-op bank’s growth strategy has been more focused on expanding in Kenya as opposed to expanding beyond boarders. Outside Kenya, the lender owns 51 percent stake in Co-op bank South Sudan.
Global rating agency Moody’s had in April said that it expects the JBB deal to serve as a springboard for Co-op bank to raise the share of loan book to the small and medium sized enterprises (SMEs).