Kenyan bank enters Uganda

Equity Bank Limited has signed a conditional agreement with the Uganda Microfinance Limited (UML) to take up 100% of the bank's share capital.

“Since the investment by Helios EB, we have been actively engaged in strategically consolidating our dominant banking position in the country and seeking prudent regional entry points,” said Equity CEO Dr. James Mwangi.

The acquisition price of KSh1.66bn will be met through an allotment to the current owners of 11,333,333 new ordinary shares of the Bank at a price of KSh147 per new ordinary share. These new shares will amount to 3% of the bank's expanded share capital.

The deal is pending requisite regulatory approvals from both countries. The Bank of Uganda under the Microfinance Deposit-taking Institutions act, 2003 of the laws of Uganda, the

Central Bank of Kenya under the banking Act and the Capital Markets Authority under the

Capital Markets Act will scrutinise the acquisition. The agreement with the Equity Bank board will also require approval from the Banks over 7,000 shareholders. The shareholders decision is necessitated primarily by the creation of new ordinary shares.

The deal marks the first time an indigenous Kenyan financial institution has made a 100% acquisition of such magnitude in the region. UML is the dominant microfinance institution in Uganda operating profitably with 28 branches and 14 contact offices.

Dr. James Mwangi envisages exponential growth for the current micro finance business in Uganda and says Equity Bank plans to extend UML's offering into a full-scale commercial bank, subject to approval by the Bank of Uganda.

The massive injection of capital by Helios EB gave Equity adequate war chest to consolidate its current growth, diversify into new offerings and embark on a regional foray with an eye to the Pan-African market. Last year, Equity joined the billionaire club when it announced a pre-tax profit of KSh2.4bn, a 116% increase up from KSh1.1bn recorded in the same period the previous year. Equity's total worth at the Nairobi Stock Exchange is now over KSh68.8bn (over US$1bn) making it the third largest listed company.