Top corporate deals of 2020

Cooperative Bank of Kenya officially acquired a 90 percent stake in Jamii Bora Bank on August 21. PHOTO FROM THE FILE | NMG

By BRIAN NGUGI
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Summary

• Some of the recent M&A activities span key sectors, including financial services, renewable energy, and technology.
• This is expected to intensify. Below are some of the best deals for 2020.

Some of the recent M&A activities span key sectors, including financial services, renewable energy, and technology. This is expected to intensify. Below are some of the best deals for 2020.

Co-operative Bank acquires Jamii Bora Bank for Sh1bn

Cooperative Bank of Kenya #ticker: COOP officially acquired a 90 percent stake in Jamii Bora Bank on August 21.

Co-op Bank had started talks in early March to buy a majority stake in Jamii Bora Bank. The two parties valued the deal at Sh1 billion, which was backed by shareholders of Jamii Bora, marking further consolidation in the East African nation’s banking industry.

Co-op Bank is the third largest bank in the country by market share with almost 10 percent of the domestic market. In the deal, Co-op Bank received 224.1 million new “Class A” shares equal to 90 percent of the shares, while the stake of existing Jamii Bora shareholders was diluted to 10 percent.

Jamii Bora Bank was renamed Kingdom Bank Limited and the Cooperative Bank of Kenya appointed a new CEO in major changes.

Co-op Bank’s growth strategy has been more focused on expanding in Kenya rather than expanding across borders. Outside of Kenya, the lender owns a 51 percent stake in Co-op Bank South Sudan. It also has interests in Kingdom Securities, CIC Insurance #ticker: CIC and Co-op Fleet Africa Leasing Limited.

The International Commercial Bank of Egypt acquires Mayfair Bank

Egypt’s largest private lender, Commercial International Bank (CIB), announced earlier this year that it would inject Sh3.7 billion ($ 35 million) into Mayfair Bank following the acquisition of a majority stake in Kenya’s tier three lender.

The acquisition by CIB, which now controls the 51 percent stake in the bank, will see the lender operating under the new name Mayfair CIB. CIB was established in 1975 as a joint venture between National Bank of Egypt and Chase Manhattan Bank.

CIB is Egypt’s leading private sector bank and is listed on the Cairo Stock Exchange, the London Stock Exchange and the New York Stock Exchange.

The lender has a network of more than 200 branches in Egypt, two representative offices in Dubai (United Arab Emirates), and the Ethiopian capital Addis Ababa. Mayfair is the fourth smallest lender in Kenya with a market size index of 0.17 percent in February, according to data from the CBK.

The bank was licensed in June 2017. Its losses increased 37 percent last year to Sh365.9 million, making it one of the few losing lenders in the Kenyan banking market of 43 banks.

KCB buys two banks in Rwanda and Tanzania in a Sh4.3bn deal

KCB Group #ticker: KCB has signed a deal with London-listed financial services firm Atlas Mara Limited to buy stakes in its banking units in Rwanda and Tanzania in a deal valued at Sh4.3 billion.

The proposed transaction will see Kenya’s largest lender by assets acquire Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC).

Under the proposed deal, KCB said it will acquire a 62.06% stake in Banque Populaire du Rwanda Plc and a 100% stake in African Banking Corporation Tanzania.

The deal with KCB came months after Equity Bank Group canceled its plan to acquire four banking subsidiaries of Atlas Mara Limited in a move aimed at preserving its capital in the aftermath of the Covid-19 pandemic.

The parties had started talks in April last year, but negotiations targeting Atlas Mara units in Rwanda, Zambia, Tanzania and Mozambique dragged on until the pandemic hit.

Equity buys DRC bank for Sh11.1 billion

Equity #ticker: EQTY signed an agreement to buy a 66.5 percent stake in BCDC from George Arthur Forrest for $ 105 million (Sh11.1 billion). Part of the money, Sh2.1 billion, will be held in an escrow account and remitted to the seller for two years, provided that Equity finds no new liabilities in the DRC bank.

Equity said the transaction aims to deepen its regional diversification as well as improve scale in the DRC, where it already owns another bank (Equity Bank Congo). BCDC made a net profit of Sh800 million in the semester ending June 2019, when it also had net assets of Sh8.5 billion.

Naivas sells 30 percent stake for Sh6bn to private equity funds

The Naivas supermarket chain raised Sh6 billion from the sale of a 30 percent stake to a consortium of investors, including the International Finance Corporation (IFC), valuing the retailer at Sh20 billion.

The amount paid in the agreement, one of the largest in the regional commercial space. The IFC, private equity firms Amethis and MCB Equity Fund and German sovereign wealth fund DEG have joined forces to acquire the minority stake, and the deal will fuel Naivas’ expansion across the country.

The breakdown of holdings held by institutional investors was not immediately clear. However, in separate disclosures, IFC said it invested $ 15 million (Sh1.6 billion) while DEG said it provided $ 10 million (Sh1 billion).

Nepalese billionaire buys Fairmont for 2.8 billion shillings

Saudi billionaire Prince Al-Waleed bin Talal’s stake in the troubled Fairmont The Norfolk and Fairmont Mara Safari Club was bought by Chaudhary Group, which is associated with billionaire Nepalese lawmaker Binod Chaudhary.

The deal, estimated at Sh2.8 billion, will be the second deal in the region for the Kathmandu-based multinational, which also owns Le Relax Hotel in the island nation of Seychelles in the Indian Ocean.

Chaudhary Group, which is associated with Binod Chaudhary, a billionaire Nepalese legislator, has already included the two hotels among its string of high-end hotel investments spread across Asia and the Middle East.

Jubilee Holdings sells Sh10.8 billion stake to German insurer

Jubilee #ticker: JUB sold majority stakes in its regional P&C subsidiaries to German conglomerate Allianz SE for a total of Sh10.8 billion, marking one of the largest transactions in the industry in recent years.

Allianz will acquire 51-66 percent controlling stakes in Jubilee’s short-term or general insurance units in Kenya, Uganda, Tanzania, Burundi and Mauritius.

Jubilee Holdings will receive Sh7.75 billion, while the remainder will be invested in operating businesses. As part of the transaction, Allianz’s subsidiary in Kenya (Allianz Insurance Company of Kenya Limited) will merge with Jubilee General Insurance Limited, which handles coverage for fire, accident and theft.

Safaricom buys Sh385m stake in UK gas company

Safaricom #ticker: SCOM bought a stake in UK company Circle Gas Limited for 384.6 million shillings, marking its entry into the cooking energy business as it continues to diversify sources of income outside of the voice business.

The telecommunications company reveals in the latest annual report that it completed the transaction last December, earning it 18.96 percent of the issued shares of the England-based firm. Circle Gas has a local subsidiary, M-Gas, with which Safaricom started working last January.

However, the telecommunications company did not disclose the deal at the time.

Leapfrog acquires a 24.1 percent stake in ICEA for $ 2.4 billion

ICEA Lion Insurance Holdings, which is controlled by the family of former Kenya Central Bank Governor Philip Ndegwa, sold a 24.1 percent stake to private equity firm Leapfrog Investments in a deal valued at Sh2.4billion.

Leapfrog is using its investment vehicle Eastern Africa Holdings Limited for the purchase that valued ICEA Lion Insurance Holdings at Sh10 billion.

The Ndegwas, one of the wealthiest families in Kenya, have proposed or completed five divestitures and mergers in the past five years, including the October 2019 merger of NIC Group and CBA to form NCBA Group.