Old Mutual has announced that it is set to buy a controlling stake in the country’s second largest deposit taking micro-finance (DTM), Faulu Kenya.
Old Mutual, which provides life assurance, asset management, banking and general insurance services said that the transaction is conditional on legal agreements being finalised and relevant regulatory approvals being obtained with an expected completion date before the end of 2013.
“We have concluded talks and are in the process of getting regulatory approvals,” Dumo Mbethe, Old Mutual’s chief operation officer told The EastAfrican.
The move will allow Faulu Kenya, to meet Central Bank of Kenya’s requirements of a diversified ownership and which bar investors who are not banks, foreign finance companies or the government from owning more than a 25 per cent of local banks.
The banking regulator ranked Faulu Kenya the second largest DTM with a 23.7 per cent market share as at the end of last year after Kenya Women Finance Trust which had 61.5 per cent market share.
SMEP DTM, which is the third largest in the country, was ranked third controlling 9.4 per cent of the market.
“The exercise entailed a rigorous vetting process to pick the best suited partner in line with Faulu’s commitment of being a financial bridge to success for Kenyans. This also allows Faulu to comply with regulatory requirements and attain its aggressive growth plans,” said John Mwara, Faulu Kenya’s managing director in a statement.
Mr Mwara said that the move concludes a two-year divestiture process that has seen Faulu engage with over 20 potential financial partners, subsequently narrowing down to six suitable local and international institutional investors.