Kenya’s Central Bank says SBM Holdings, Mauritius 2nd biggest listed company has expressed interest to acquire Fidelity Bank of Kenya and the deal is expected to be completed in a month’s time.
SBM said in a filing with the Mauritius Stock Exchange said that it would inject about Sh 1.45 billion of fresh capital into Fidelity, once the deal gets all the required regulatory approval.
“The acquisition is in line with SBMH’s regional expansion strategy into East Africa,” SBM trading statement.
“The proposed acquisition, which is subject to regulatory approvals in Kenya and Mauritius, will mark the entry of SBM Group into Kenya’s banking sector.” Said Central Bank in a statement.
Fidelity Commercial Bank began operations in 1988 and was later converted into a commercial bank in April 1996. As at December 2015, the Bank was ranked 31 of the 41 lenders with a market share of 0.39% and has 14 branches across the country.
In April this year, Fidelity Bank announced a deal with Duet Private Equity to inject Ksh. 1.9 billion into the bank in order to strengthen the Bank’s capital base and support its expansion both locally and in the region. The management also noted that they were planning to list on the Nairobi Securities Exchange in 2018.
The acquisition comes exactly three months after President Uhuru Kenyatta signed into law the bill that seeks to regulate bank’s interest rates. Analysts had then predicted that the bill would lead to mergers/acquisitions with the small banks as a result of fall in profitability and rise in loan impairments. They argued that the rate caps could force loan prices to converge, forcing lenders to compete more aggressively on products and service which is more likely to benefit larger banks.
SBM Group is the second largest company listed on the Stock Exchange of Mauritius with an asset base of about Ksh.417 billion (US$4.2 billion) as of September 2016. The Group’s banking arm, SBM Bank (Mauritius) Ltd, is one of the leading banks in Mauritius with 42 domestic branches and has a footprint in India, Madagascar, and a representative office in Myanmar.
“SBM Group will bring its experience and expertise from Mauritius and other markets, to enhance competitiveness and the resilience of Kenya’s banking sector. SBM Group is pursuing an international expansion strategy, and for the African region, it is anchored on Kenya as the entry point for Eastern Africa.” Said CBK.