KCB Group has cancelled its plan to acquire a Tanzanian lender from London-listed Atlas Mara Limited, citing regulatory hurdles.
KCB in late November 2020 announced that it would acquire 62.06 percent stake in Banque Populaire Du Rwanda (BPR) and 100 percent stake in African Banking Corporation Tanzania Limited (BancABC).
The lender, which already has a presence in the two markets, signed a share purchase agreement Atlas Mara and gave itself a six-month timeline to complete the deal.
The transaction would be settled in cash with $32 million being incurred on BPR and $8 million on BancABC. The actual cash consideration payable by KCB would, however, be determined based on the final book value of the two banks at the completion of the transactions.
The Kenyan multinational lender, with a presence in five East African markets, said the acquisitions reflected its expansion strategy in the regional market.
“As announced, completion of the transaction was subject to certain conditions...including receipt of all regulatory approvals. As of the date hereof, certain regulatory approvals have not been received within the prescribed timeframe specified in the Agreement,” said KCB in a regulatory notice to shareholders on Tuesday.
“As a result, without further agreement by the parties to extend the long-stop date, the agreement has been terminated and, accordingly, the parties will not proceed to complete the transaction as previously envisaged.”
KCB completed the purchase of the Rwandan bank in August, acquiring a 76 percent stake in BPR from Atlas Mara (62 percent) and private equity firm Arise (14 percent). It plans to acquire the remaining 24 percent stake owned by other minority investors.
KCB had inked the deal with Mara months after Equity Bank Group called off its plan to acquire four banking subsidiaries from Atlas Mara, saying it needed to preserve its capital in the wake of the Covid-19 pandemic.
The parties had initiated talks in April 2019, but the negotiations targeting Atlas Mara’s units in Rwanda, Zambia, Tanzania and Mozambique dragged on until the pandemic hit.
Atlas Mara is selling its African banks to KCB and other lenders to raise funds to pay its creditors, some of whom had launched liquidation proceedings against the multinational that was the brainchild of former Barclays Plc’s chief executive Bob Diamond.
Big banks led by Equity, KCB, and I&M and DTB have been deepening and expanding their presence in the region in pursuit of growth and diversification.
KCB says it will explore other opportunities “in order to enhance our regional participation, accelerate our growth and maintain sustainable long-term African success in line with our expansion and growth strategy.”