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How Much Is Equity Bank-BPR Deal? US$105 Million?

Equity Group Holding .Plc. (EGH) announced Tuesday in a statement signed by Dr. James Mwangi, the group’s Managing Director and Chief Executive Officer, a swap deal with Atlas Mara.

The swap, in simple terms means Atlas Mara will become a shareholder in
Equity Group Holding .Plc.

The two banks will exchange certain banking assets of ATMA in four countries for shares in EGH.

In other words, Atlas Mara was offered shares in Equity Group and in return, Equity Bank was offered shares of Atlas Mara in all its banks.

The swap will include; a 62% of the share capital of Banque Populaire du Rwanda Ltd (BPR).

This massive deal also will see a take up of 100% of share capital of Zambias African Banking Corporation Ltd (ABCZam)  and a swallow up of 100% of the share capital African Banking Corporation Ltd (ABCTz).

The swap also extends to Mozambique and has affected 100% share capital of African Banking Corporation Ltd (ABCMoz).

By acquiring the Atlas Mara Subsidiaries including ABCZam, ABCMoz, ABCTz and BPR, the Kenyan group EGH said it will be able to expand its footprint making its services accessible and more competitive across the African continent.

ABCZam, ABCMoz, ABCTz and Rwanda’s BPR are subsidiaries of ATMA – a financial services company listed on the London Stock Exchange.

ATMAs largest shareholder is Fairfax Africa Holdings Corporation, a Canadian company listed on the Toronto Stock Exchange- its investment objective is to achieve long-term capital appreciation while preserving capital by investing in public and private equity securities and debt instruments of African Businesses or other businesses with customers, suppliers or business primarily conducted in , or dependent on, Africa.

Cost of the deal

A trusted source told Taarifa that the swap deal is approximately worth US$105 million.

Going by the audited statement of financial position as at 31 December 2018, BPR is worth Rwf2745 billion (total equity=Rwf40,249,117 and liabilities = Rwf234,357,265).

The bank made Rwf3.79 billion in profits in 2018.

BPR’s CEO, Maurice Toroitich, who also serves as its Executive Board Member since September 7, 2017, told The new Times that the two banks are still in conversations regarding a complete transaction.

Negotiations, regulatory compliance and due diligence processes, may go up to beginning of 2020, he said.

A source told Taarifa that the central bank will definitely require to see a business plan and a likely demand for cash injection by Equity Bank since the swap involves trading in shares between the two parties.

Once the deal is completed, the new entity could become Rwanda’s largest bank, knocking off Bank of Kigali, the current market leader.

Bank of Kigali recorded an after tax profit of Rwf27.4billion (about $30.7 million) in 2018, total assets of Rwf 877.4 billion (US$ 983.6 million) and Rwf568.1 billion (US$ 636.9 million) in loan portfolio as at 31 December 2018.

With Equity Bank Rwanda’s loan portfolio of about US$ 140 million, the swap deal could potentially catapult the combination of the two to more than $500 million, once the transaction is completed.

BPR History

BPR journey started in 1975 in a village called Nkamba in Eastern province, a group of ordinary Rwandans had an extraordinary dream.

They wanted access to finance to help them achieve better livelihoods. This is how the first Bank Populaire was born.

Subsequently, other community based savings and credit schemes were born in other areas of Rwanda becoming autonomous with “Banques Populaires”.

The growth of these savings and credit schemes and their significance in financial inclusion led to the formation of an umbrella institution in 1986 under the name “Union des Banques Populaires du Rwanda (UBPR).

In 2008, UBPR transformed to become a fully-fledged commercial bank while retaining its cooperative roots.

Known as the neighborhood bank, BPR has become the bank with the largest network in Rwanda offering financial services to the furthest corners of the country.

Atlas Mara is rapidly growing into the sub-Saharan African financial services group that has acquired control of (or significant stakes in) banking operations in seven sub-Saharan African countries, including Botswana, Zimbabwe, Zambia, Tanzania, Mozambique, Rwanda and Nigeria, several of which rank amongst the fastest growing countries in the world.

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