As it celebrates 35 years of operation in Kenya, Equity Bank is lining up an acquisition in the Democratic Republic of Congo that is set to boost its standing, expanding its portfolio in the central African country.
In a notice to the Nairobi Securities Exchange (NSE) on September 6, the listed lender announced its plans to acquire the Banque Commerciale du Congo (BCDC), the second largest bank in DRC by balance sheet and shareholders equity.
“EGH hereby announces to the public that its Board of Directors have agreed to the entry into a non binding term sheet with certain shareholders (the Selling Shareholders) of Banqué Commerciale du Congo (BCDC), for the purchase for cash of a controlling equity stake in BCDC,” Equity Group Holdings said.
The notice, signed by Equity chief executive James Mwangi, added that the proposed acquisition is ” with a view to eventually amalgamating the business of BCDC with that of EGH’s existing banking subsidiary in DRC, Equity Bank Congo.”
“Until further announcements regarding the Proposed Transaction are made, the shareholders of EGH and other investors are advised to exercise caution when dealing in EGH ordinary shares on the Nairobi Securities Exchange, the Uganda Securities Exchange and the Rwanda Stock Exchange,” said the Equity Group CEO.
While Mwangi did not state who the selling shareholders in the transaction are, the likelihood is that Equity will acquire the stake owned by Belgian entrepreneur George Arthur Forrest and his family.
Forrest, born in Lubumbashi, DRC, is one of the richest men in Congo and owns the Forrest Group, a chain of companies active in wind power and hydroelectric energy, construction, mines and metallurgy, biological food and aviation.
The family of George Forrest owns 66.5% in BCDC, with the DRC Government’s stake standing at 25.5%. The remaining 7.9% is held by other shareholders.
Banqué Commerciale du Congo is licensed by the Central Bank of Congo and offers services such as
loans, transaction accounts, savings, debit cards, credit cards and Western Union. It has over 20 branches in the central African nation.
“The Proposed Transaction is subject to conditions that are customary to transactions of this nature, including but not limited to completion of due diligence, the entering of detailed transaction agreements, obtaining and shareholder approvals and the receipt of regulatory approvals from the Capital Markets Authority, the Central Bank of Kenya, the Central Bank of Congo and competition regulators (as applicable),” Mwangi said.
Already, Equity has a subsidiary in the DRC, having acquired Pro-Credit Bank in 2015 through a share swap deal that saw the Kenyan lender gain 79% controlling stake. Last year, Pro Credit Bank rebranded to Equity Bank Congo.
Equity Bank Congo is the seventh largest lender in DRC, and has risen to be among the most profitable subsidiaries owned by the Kenyan firm which was founded in 1984. As it celebrates 35 years of existence, the bank which has been posting banners of its celebratory year is rumoured to be considering a rebrand.
