Equity Group Holdings (EHG) on Tuesday announced the acquisition of 66.53% stake of Banque Commerciale du Congo (BCDC), strengthening its presence in the country and continuing with its quest to sit at the same table with the continent’s biggest lenders.
In a statement, Equity Group Holdings Chief Executive James Mwangi announced that in light of the current economic situation, his company and George Arthur Forrest, the selling party, have closed the deal at USD 95 million (Ksh10.2 billion) after initially settling for USD105 million (Ksh11.3 billion).
“Both parties having taken into account the events that have taken place since the entry into the Agreement and particularly that the COVID-19 pandemic is having adverse effects on the economies of the World and the economy of the Democratic Republic of Congo,” Mwangi said in the statement.
The two entities first entered into the agreement on November 18, 2019, but the conclusion of the deal was dependent on getting the necessary regulatory approvals from the Central Bank of Kenya (CBK), Banque Centrale du Congo, and the COMESA Competition Commission and the board approvals of BCDC and EGH.
“EGH is pleased to inform its shareholders and the public that the conditions precedent to the Acquisition including the receipt of corporate and regulatory approvals have been fulfilled and/or waived and the Acquisition was completed on 7 August 2020,” Mwangi added in the statement.
The idea behind acquiring the Congolese lender is to amalgamate the business of BCDC with that of EGH’s existing banking subsidiary in the Democratic Republic of Congo, Equity Bank Congo S.A.
“We take this opportunity to welcome BCDC directors and employees to the EGH Group and look forward to working together to provide BCDC’s current and new customers with access to competitive, tailored financial services to improve people’s lives and livelihoods whilst also delivering significant value to our stakeholders,”added Mwangi.
The acquisition of the lender represents somewhat of a deviation from the script for Equity Group which had expressely indicated that it is currently adopting a cash preservation strategy in light of COVID-19.
On June 23, the bank announced that it had shelved plans to acquire Atlas Mara’s (ATMA) banking businesses in Rwanda, Tanzania, Zambia, and Mozambique.
At the time, Mwangi said the decision has been informed by the uncertainty of risk which precipitated the proposed withdrawal of Ksh9.5 billion dividend pay-out to shareholders.
In January 2020, the board announced the extension of discussions with ATMA following the expiry of the transaction period before the two parties could sign a detailed transaction agreement.
During the extended period, the two parties extended discussions to try and push through a deal but ultimately none was reached.
“After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the transaction for the foreseeable future,” said Dr. Mwangi in a press dispatch
