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PE firms get watchdog’s nod to purchase Prime Bank stake

cak

CAK director-general Wang’ombe Kariuki. FILE PHOTO | NMG

The Competition Authority of Kenya (CAK) has approved the acquisition of a minority stake in Prime Bank by private equity firms AfricInvest and Catalyst Principal Partners.

The CAK, in a gazette notice on Friday, gave the go-ahead for the transaction indicating it would not negatively affect the competition.

“It is notified for general information that the Competition Authority of Kenya has authorised the proposed purchase and subscription of up to 25 per cent shareholding in Prime Bank Ltd by Africinvest Azure SPV,” said director-general Wang’ombe Kariuki.

Private equity firms AfricInvest and Catalyst Principal Partners early this year acquired a minority stake in Prime Bank through injection of Sh5.1 billion capital. The two PE funds became top shareholders of the bank. The cash injection, which earned them a 24.2 per cent stake, valued Prime Bank at about Sh21.1 billion.

“Prime Bank welcomes this new partnership with AfricInvest and Catalyst, which further strengthens our capital base in order to carry out strategic plans which include … expanding locally and regionally,” the bank’s managing director, Bharat Jani, said in a statement on January 7, this year.

Prime Bank reported a net profit of Sh1.5 billion in the nine months ended September 2018, a 10 per cent growth from Sh1.4 billion a year earlier.

Prime Capital is listed as the bank’s second-biggest shareholder with a 14.36 per cent stake while Jamson Ltd, Crason Ltd, Nason Ltd, Prime Trustees and Capital Nominees hold 8.02 per cent equity each.

There has been a rise in bank mergers and acquisitions in the past few years, motivated by a desire to cut cost and beef up capital in the wake of interest-rate caps and stringent rules.

“There are too many banks for an economy the size of Kenya and with the new capital requirement many smaller banks are finding it hard to survive,” said Kunal Ajmera, chief operating officer at Grant Thornton.