Equity snaps up Rwanda bank in $47m deal

Thursday June 15 2023

Cogebanque bank in Kigali, Rwanda. FILE PHOTO | POOL


Equity Group is set to acquire a controlling stake in a Rwandan bank at RWF54.68 billion (Ksh6.67 billion - $47.75 million), marking the latest in a series of deals that have seen Kenyan banks nearly double their profitability in the East African region in just a year.

The lender, which tops the profitability chart in Kenya, announced on Wednesday it has signed an agreement to acquire a 91.9 percent stake in Compagnie Générale De Banque Plc (Cogebanque) in a deal that values the Rwandan bank at Ksh7.26 billion ($51.97 million).

Equity will buy the stake from the Government of Rwanda, Rwanda Social Security Board, Sanlam Vie Plc and Ms Judith Mugirasoni and plans to eventually make an offer to buy the remaining shares.

“By acquiring Cogebanque, Equity Group will be able to expand its footprint and consolidate its position in Rwanda,” said James Mwangi, chief executive at Equity Group in a notice.

This is the second attempt by Equity to buy a bank in Rwanda, coming months after the collapse of a deal in which Equity 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.

Read: Rwanda leads region in minting profits for Nairobi banks

KCB, Co-operative Bank of Kenya, I&M, NCBA, Stanbic, NCBA, DTB, Guaranty Trust Bank and ABC Bank all run subsidiaries in the region and are still keeping their purses open for more acquisitions.

Others including Family Bank planning to raise money and expand outside Kenya.

Central Bank of Kenya data shows Kenyan banks’ net profit from subsidiaries outside Kenya nearly doubled to Ksh32.51 billion ($232.71 million) last year from Ksh17.23 billion ($123.34 million) in the previous year, pointing to the impact of expansion that saw loan books outside Kenya hit Ksh725.8 billion ($5.2 billion) from Ksh510.3 billion ($3.65 billion).

The number of branches outside Kenya has grown from 494 in 2021 to 552 last year, holding Ksh1.29 trillion ($9.23 billion) as deposits. These branches are served by 11,125 employees.

Read: Kenyan banks lead regional peers with 150 new branches

Equity’s deal, if completed, will see these numbers grow since Cogebanque runs 28 branches in Rwanda and closed last year with RWF9.07 billion (Ksh1.11 billion - $7.95 million).

According to the binding term sheet, Equity will pay a cash consideration of RWF297,406 (Ksh36, 485 - $261) per ordinary share for the 183,854 ordinary shares to be purchased.

The acquisition transaction is currently being subjected to conditions that are customary in deals of this nature, including completion of confirmatory due diligence and signature of definitive agreements.

Equity BCDC, the DRC unit, last year saw its profit after tax grow by 45 percent to hit Ksh5.8 billion ($41.52 million), extending its lead as the most profitable subsidiary followed by the Rwandan unit with Ksh2.8 billion ($20.04 million).

Read: Equity Group raises stake in DRC subsidiary

This means the latest deal if completed, looks set to cut the gap between DRC and Rwanda unit profits.

Equity also has operations in Uganda, Tanzania and South Sudan.

The deal also requires clearance from regulators including the Central Bank of Kenya, Banque Nationale du Rwanda, Comesa Competition Commission and receipt of all applicable board and shareholder approvals.

Equity deal will add to that of KCB which last December Group paid Ksh25.1 billion ($179.67 million) to acquire an 85 percent stake in DRC lender, Trust Merchant Bank (TMB), in a deal that has given it a foothold in the vast mineral-endowed country.

Equity last year invested an additional Ksh12.2 billion ($87.33 million) in its regional subsidiaries including buying additional stake in its DRC subsidiary, bringing total spending on subsidiaries since 2019 to Ksh26.64 billion ($190.7 million).

Family Bank and I&M are in the race for more deals in the region through acquisitions that may deepen further the operations of Kenyan banks outside the country.

I&M Group board in May got shareholder approval to make up to $75 million (Ksh10.5 billion) buyouts in future without requiring a fresh nod, pointing to the bank’s continued focus on growth.

Family Bank is eying up to $100 million (Ksh13.97 billion) through private placement to fund acquisitions in Kenya and Eastern or Central Africa in the race to tier I status.

The lender, which will be turning 40 next year, says Uganda, DRC Congo, Tanzania and Ethiopia are on its priority list.