KCB clinches Sh4.4b Rwanda, Tanzania deals, prepares DRC

By Noel Wandera
Friday, November 27th, 2020
In summary

ACQUISITION:  KCB Group will pay $40 million (Sh4.39 billion) to fully acquire Tanzania’s African Banking Corporation Tanzania Ltd (BancABC) and a 62 per cent stake in Rwanda’s Banque Populaire du Rwanda Plc (BPR) from Atlas Mara (ATMA).

The move follows signing of a legally binding agreement between the two entities, which will see East Africa’s biggest bank by assets increase its footprint within the region.

However, the acquisition is subject to regulatory approvals from the Central Bank’s of Rwanda and Tanzania, as well as the Common Market for Eastern and Southern Africa (Comesa)’s competition authority.

KCB Group Financial Chief Officer Lawrence Kimathis said ATMA will receive $32 million (Sh3.5 billion) for BPR and $8 million (Sh879.6 million) for BancABC.

“The total combined value for what we will be paying for the two is about $40 million that will be funded through a cash transaction.

Our balance sheet is able to support doing a cash deal,” said Kimathi, adding that the deals should be done by mid next year.

He said KCB is also in talks with BPRs’ other shareholders with a view to fully acquiring the Rwandese bank, a move chief executive Joseph Oigara said will double KCB’s market share and make the bank the second largest lender.  

The merged entity in Tanzania is expected to rank the group as a top 10 bank in the region.

Oigara said the transaction was part of KCB’s ongoing strategy to explore opportunities for new growth, while investing in, and maximising returns from the group’s existing businesses.

The acquisition, he added, will support the group’s leadership position and give it a stronger edge to play a bigger role in driving the financial inclusion agenda in the East African region while building a robust and financially sustainable organisation.

“The transaction fits within the group’s expansion strategy and will see us increase our market share and distribution network across Rwanda and Tanzania,” Oigara said.

It will also improve the group’s operating leverage by enabling us to deliver existing product offerings to a wider base of customers while positioning the bank for sustainable growth in the long-term, ” he added.

The bank has presence in Uganda, Tanzania, Rwanda, Burundi, South Sudan and a representative office in Ethiopia, and is gearing for entry into the Democratic Republic of Congo market in the next two years. – Noel Wandera