Kenya’s Equity Group considered several factors in acquiring Rwanda’s Compagnie Générale De Banque Plc (Cogebanque) at a whoping price of Rwf54.68 billion (Sh6.7 billion), the lender revealed on Monday.
According to details contained in a circular to shareholders that the valuation was partly based on potential income after the deal as well as comparisons of the Sh5.3 billion that its rival KCB Group paid for a 62.06% stake in Banque Populaire du Rwanda (BPR).
Equity Group says that it picked on the price for a 91.9% stake in Rwanda’s Cogebanque with guidance of AstuteLogic Advisory Limited—a transaction advisor.
The lender has also disclosed that it arrived at the price after striking a deal with the Government of Rwanda, a principal shareholder in Cogebanque, to buy the Rwandese bank’s head office at Rwf11.49 billion (Sh1.39 billion) within one year of completion of the transaction.
“Consequently, this recoverable amount for the Head-office Building has been built into the price to be paid for the sale shares,” says the lender in the circular giving details of the deal.
Equity plans to complete the transaction on or about August 10, 2023, from the Government of Rwanda (41.67%), Rwanda Social Security Board (30.6%), Ms Judith Mugirasoni (12.68%) and Sanlam Vie Plc (6.98%).
The lender says it sees the macroeconomic outlook of Rwanda and the East Africa region as attractive and hopes to achieve economies of scale by amalgamating Cogebanque into Equity Group.
Equity also considered the rate of return on investment that it would expect from investments with a similar risk profile to that of Cogebanque.
The lender also hopes to eventually make a bid to 23 other shareholders to acquire 8.07 percent that will remain after the initial deal is completed.
Equity says it will pay the agreed price from internally generated cash resources. As of 31 March 2023, Equity reported cash balances of Sh14.68 billion in its stand-alone company financial statements.
The Government of Rwanda in December last year acquired 41.67 percent in Cogebanque after paying
Cogebanque closed last year and ranked fifth among the licensed banks operating in Rwanda when measured by reported aggregate total assets and total shareholder funds.
Equity will be keen to seal this deal after the collapsed deal in which it was to buy 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda from Atlas Mara.
The deal flopped in July 2020 alongside that of buying 100 percent of African Banking Corporation of Zambia, African Banking Corporation Tanzania and African Banking Corporation Mozambique.
The latest proposed transaction will deepen Equity’s acquisition drive in the region as has been seen with its competitors who have been cutting their reliance on profits from Kenya by expanding in the region.
Businessdailyafrica
