UK-based Genesis Investment Management LLP has enhanced its shareholding in Kenya’s Equity Group Holdings by acquiring an additional 4.4 per cent stake worth Ksh7.4 billion ($73.18 million).

The shares were held by private equity firm Helios EB Investors, which is exiting the group after seven years of dominance as a principal shareholder in Kenya’s largest bank by customer numbers.

The exit of Helios is expected to pave the way for new investors who have a long-term view of the bank and who can participate in capital-raising programmes such as rights issues.

The deal, the largest ever single transaction in the history of the Nairobi Securities Exchange (NSE), was completed on June 30.

Genesis Investment Management LLP is one of the biggest global fund management companies, with a focus on long-term investment returns in emerging markets.

The company has been the link between the Nairobi bourse and foreign investors seeking investment opportunities in Kenya through its Kenyan subsidiary Genesis Kenya Investment Management Ltd.

The Kenyan subsidiary has been acquired by Centum Investment Group, which now owns a controlling 73.35 per cent stake in the firm.

Equity Bank Group is restructuring the composition of its shareholders, bringing in  new shareholders who have a  long-term vision of the business.

Rights issue

“We made a decision we needed institutional investors with a long-term horizon who can take up their rights in a rights issue, not just short-term private equity funds,” group chief executive James Mwangi told The EastAfrican.

“I have now stabilised and globalised the shareholding structure of the bank by bringing in people who will not only provide money but also knowledge, expertise and good corporate governance” he added.

The bank’s stock at the Nairobi bourse has risen amid two share splits from Ksh20 ($0.19) per share in the year 2000 to an average of Ksh50 ($0.49) per share in 2014. Last week, the share was trading at an average of Ksh47 ($0.46) on the NSE.

Helios bought a 24.45 per cent stake in Equity Bank at $185 million in 2007, becoming a major shareholder in the bank with two seats on the board.

However, the private equity firm has gradually ceded ground as the single largest shareholder by reducing its stake to 5.39 per cent, making an estimated Ksh38 billion ($375.8 million) in the process.

This amount  is also to rise with the disposal of the remaining 5.39 per cent shareholding as the firm exits from Equity Bank by August 2016.

Helios’s principal investors include International Finance Corporation — the investment arm of the World Bank, the Overseas Private Investment Corporation of the US and the Commonwealth Development Corporation.

The major beneficiary of the Helios exit from Equity Bank has been the Norwegian private equity, Norfininvest AS, which is jointly owned by Norfund and NorFinance AS.

The fund has become the single largest shareholder in Equity Bank by acquiring a 12.22 per cent stake from Helios.

Mr Mwangi said the combination of Norfund’s expertise and experience in the financial services sector as well as its demonstrated long-term commitment to promoting financial inclusion in emerging and developing markets will be invaluable contributors to the bank’s growth.

“As I move to conquer Africa with investments in 15 countries in 10 years, I need to know I have the right people to deliver on this task,” said Mr Mwangi.

READ: Equity Bank builds $227m war chest for Africa buyouts

Uganda’s National Social Security Fund — East Africa’s fastest growing pension fund — has also purchased a 2.44 per cent stake from Helios, joining the growing list of Equity Bank’s new class of shareholders.

READ: Uganda NSSF buys more stake at Equity Bank

The bank is also looking to bring on board state pension funds from other East African countries such as Kenya, Tanzania and Rwanda.

“We want East Africans who are our customers to be the beneficiaries of the wealth we are creating; that  is why we want the pension funds of other EAC countries to take up the remaining five per cent stake owned by Helios,” said Mr Mwangi.

Equity Bank currently has close to 9 million customers with operations in Kenya, Uganda, Tanzania, Rwanda and South Sudan.

The Group aims at becoming a pan-African bank with presence in over 15 countries across the African continent, leveraging on the use of technology to enhance non-interest income.

The bank is listed on the NSE, Uganda Securities Exchange and Rwanda Stock Exchange.