Why Equity paid $47m for Rwanda bank

Monday July 10 2023

Cogebanque bank in Kigali, Rwanda. FILE PHOTO | POOL


Equity Group has disclosed that it considered multiple factors in agreeing to buy a Rwandan bank at Rwf54.68 billion ($47 million) including the potential cash flows and the valuation of a KCB deal in the same market.

The lender says that it picked on the price for a 91.9 percent stake in Rwanda’s Compagnie Générale De Banque Plc (Cogebanque) with the guidance of AstuteLogic Advisory Limited—a transaction advisor.

Read: Equity snaps up Rwanda bank in $47m deal

Equity says in a circular to shareholders that the valuation was partly based on potential income after the deal as well as comparisons of the $37 million that its rival KCB Group paid for a 62.06 percent stake in Banque Populaire du Rwanda (BPR).

Read: KCB opens new unit in Rwanda after merger

The lender has also disclosed that it arrived at the price after striking a deal with the Government of Rwanda, a principal shareholder in Cogebanque, to buy the Rwandan bank’s head office at Rwf11.49 billion ($9.9 million) within one year of completion of the transaction.


"Consequently, this recoverable amount for the Head-office Building has been built into the price to be paid for the sale shares,” says the lender in the circular giving details of the deal.

Equity plans to complete the transaction on or about August 10, 2023, from the Government of Rwanda (41.67 percent), Rwanda Social Security Board (30.6 percent), Ms Judith Mugirasoni (12.68 percent) and Sanlam Vie Plc (6.98 percent).

The lender says it sees the macroeconomic outlook of Rwanda and the East Africa region as attractive and hopes to achieve economies of scale by amalgamating Cogebanque into Equity Group.

Equity also considered the rate of return on investment that it would expect from investments with a similar risk profile to that of Cogebanque.

The lender also hopes to eventually make a bid to 23 other shareholders to acquire 8.07 percent that will remain after the initial deal is completed.

Equity says it will pay the agreed price from internally generated cash resources. As of 31 March 2023, Equity reported cash balances of Ksh14.68 billion ($104 million) in its stand-alone company financial statements.

The Government of Rwanda in December last year acquired 41.67 percent in Cogebanque.

Cogebanque closed last year and ranked fifth among the licensed banks operating in Rwanda when measured by reported aggregate total assets and total shareholder funds.

Equity will be keen to seal this deal after the collapsed deal in which it 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.

Read: Equity applies brakes on expansion after Mara flop

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.

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 are planning to raise money and expand outside Kenya.

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