Actis makes 45pc partial exit from Ugandan lender dfcu
Posted Tuesday, April 23 2013 at 11:44
London based private equity fund Actis is partially exiting from its investment in dfcu Limited, the holding company of dfcu Bank, a Ugandan lender it invested in more than ten years ago.
dfcu Limited, which is listed on the Uganda Securities Exchange (USE) on Monday voluntarily requested for the suspension of trading of its shares for four weeks, pending regulatory approval for the sale of a 45.02 stake to the Norwegian Investment Fund for Developing Countries (NORFUND) and Rabo Development B.V.
According to the lenders 2011 annual report, which was the latest to be published, Actis currently holds 149,213,732 shares or a 60.02 per cent stake.
On Monday it disclosed that it had received an offer from NORFUND which wants to purchase a 17.48 per cent stake, a move that will increase NORFUND’s shareholding to 27.54 per cent while the subsidiary of Rabobank of Netherlands has offered to buy another 27.54 per cent stake.
“As a result of the potential shareholder restructuring and the time required to obtain all the necessary securities market and banking approvals, dfcu has been granted permission to voluntarily suspend the trading of its shares on the USE for a period of up to four weeks,” said dfcu Limited in a statement to shareholders.
The transaction will leave the private equity fund will only hold 15 per cent of dfcu Limited.
Last year Actis sold a 39.92 per cent stake in Uganda’s power distributor Umeme through the USE and a 80 per cent stake in BCR, a Rwanda lender, to a consortium composed of Kenya’s I&M Bank and two developmental institutions - German DEG and French Proparco.
The private equity fund is however investing heavily in real estate and in the Sub-Saharan Africa region.
Uganda’s government and the Commonwealth Development Corporation (CDC), United Kingdom’s Development Finance Institution, cofounded dfcu in 1964 but CDC in the 1980’s transferred its shareholding to the Development Finance Company of Uganda.
In 2003 during the dfcu’s initial public offer, Uganda’s government sold a stake back to CDC which then span off Actis, the private equity fund with the dfcu stake amongst other investments.
Other shareholders of dfcu Limited include Uganda’s National Social Security Fund, Central Bank of Kenya Pension Fund, Pinebridge, Bank of Uganda Staff Retirement Fund, Kenya Airways Limited Staff Provident Fund, UAP Insurance Company and Jubilee Investments.
The lender was listed on the USE on October 14, 2004 and on that trading day its share opened at Ugs290 ($0.17) and closed at Ugs305 ($0.18), giving it a value of Ugs45.7 billion ($26.3 million).
Its last traded price at the USE before the suspension was Ugs1,030 ($0.41) and was valued at Ugs256.06 billion ($101.49 million).
DFCU bank released its financial results for the year ended 2012, showing a 5.2 per cent fall in net profit to Ugs29.89 billion ($11.85 million) from Ugs31.54 billion ($12.5 million) as at December 2011.
According to analysts at Crested Stocks and Securities, the fall in profit was driven by 163 per cent increase in provision for bad and doubtful debts during an economic environment which was marked by interest rates and high but falling inflation.