I&M Bank set to complete paying for Ugandan unit in July
Tuesday February 01 2022
I&M brank in Kenya. PHOTO | FILE | NMG
I&M Group now expects to complete paying for its 90 percent stake in Uganda’s Orient Bank by July after a full review of the asset quality of the subsidiary.
The Nairobi Securities Exchange-listed firm made the acquisition in April last year but the payments to the shareholders have been staggered to take into account other pending asset and valuation matters.
I&M had initially estimated to spend Ksh3.6 billion ($31.6 million) in the buyout but the amount had risen to Ksh4.1 billion ($36 million) as of June last year.
“When you do the transaction, you are looking into the books and what you might get. Later on as you do the business may need changes here and there. That is still underway,” I&M Bank Kenya chief executive Kihara Maina told Business Daily in an interview.
“Normally we take about a year so it does run all through to July this year.”
The Kenyan banking multinational signed an agreement with the sellers to make price adjustments on account of exchange rates between the date of signing the deal and its completion.
I&M also agreed to meet the cost of post-completion integration support and to factor in Orient Bank’s net loss or net profit for the period from January 1 until completion.
Mr Kihara has however failed to disclose additional amounts that could be payable to the sellers.
“We don’t expect much variation from what we had done. We expect that within the next few months we should have a clear picture of any further adjustments that may need to be met,” he added.
I&M said the deal has given it access to additional loans worth Ksh7.7 billion ($67.7 million), deposits at Ksh18.2 billion ($160.2 million), 70,000 customers, 14 branches and 22 ATMs.
Orient Bank before was ranked 12 in the market with 2.5 percent market share.
It made a net profit of Ksh284.4 million ($2.5 million) in Uganda in the half-year ended June 2021, up from Ksh1.4 million ($12,323) the year before, reflecting the impact of its acquisition to the group.
I&M Group is expecting to leverage on cross-border trade transactions for increased returns.