Business
Kenya’s Equity Group Holdings acquires DR Congo’s ProCredit Bank – plans Africa-wide expansion
Kenyan-based Equity Group Holdings Limited, formerly Equity Bank Group has begun its promised march on Africa with the acquisition of a majority stake in ProCredit Bank, a leading player in the Democratic Republic of Congo’s small business sector.
The US$60 million deal, which is subject to regulatory approval in Kenya and the Democratic Republic of Congo, marks the first big step in a plan to enter ten new countries in the medium term.
At a press briefing in Nairobi, Tuesday, officials announced Equity Group Holdings Ltd has entered into an agreement to acquire 79 percent of the issued share capital of ProCredit Bank Congo SA (ProCredit).
The stake was perviously held by ProCredit Holding AG & Co. KGaA , Belgian investment giant BIO and Stichting DOEN.
“We are excited about our entry into sub-Saharan Africa’s third most populous country through the investment in a fast growing, well established bank,” said Equity Group CEO James Mwangi.
“This country is too big to do a greenfield so we decided to acquire a bank.”
ProCredit is the seventh largest bank by assets in the market with total assets exceeding US$200 million. It was established in 2005 and has amongst its remaining shareholders the German Development Bank KfW (with a 12 percent stake) and the International Finance Corporation (with a 9 percent stake).
“We see enormous scope for development,” Mwangi said. “This acquisition dovetails with our Equity 3.0 growth strategy as part of our commitment to deepen banking services and enhance financial inclusion in Africa.”
Earlier this month, Mwangi said Equity plans to expand to Botswana, Burundi, the Democratic Republic of Congo, Ghana, Malawi, Mozambique, Nigeria,Zambia, as well as Ethiopia – which is currently off limits to any foreign bank.
The Democratic Republic of Congo, which has a population of over 85 million and has been mired in conflict for years, has banking penetration levels of under 4 percent, well below the regional average of more than 20 percent.
Helen Alexander, Manager, ProCredit Holding AG & Co. KGaA said: “ProCredit Holding, DOEN and BIO are proud to have built ProCredit Bank Congo since its foundation in 2005. It has played a pioneering role in serving small and medium-sized enterprises and bringing banking services to DRC in general.
“After evaluating various bids, ProCredit Holdings was clear that Equity Group provided the right strategic fit to support further development.”
Equity Group was advised by Equity Investment Bank as the transaction advisor.
About Equity Group Holdings Limited: Equity Group Holdings Limited formerly Equity Bank Group was founded in Kenya, as Equity Building Society, in October 1984. Equity Building Society was originally a provider of mortgage financing for customers in the low income population. Large numbers of Africans have historically been excluded from formal sources of capital, such as banks, building societies and other regulated financial institutions. They knew little about these resources, which makes financial literacy and education strategically important to Equity Bank’s growth. Also due to its rural banking orientation, promotion of agribusiness is a significant and strategic intervention by the bank.
Having been declared technically insolvent in 1993, Equity Bank Group later returned to profitability in the following years. By 2011, Equity Bank had more than 7.15 million customers; nearly half of bank accounts in Kenya. The company’s vision is “to be the champion of the socio-economic prosperity of the people of Africa”.
Equity Bank has been severally voted the “best bank in retail banking” due to, among other factors, the customer dedication and talented management team. In addition to enjoying widespread recognition domestically, the company has attracted a lot of global accolades and awards, as other developing countries in Africa and Asia seek to learn from Equity’s low margin, high-volume model.
Equity Group Holdings Limited CEO James Mwangi was in 2012 named the Ernst & Young World Entrepreneur of the year 2012.
Source: Business Daily Africa