By Reuben Olita in Nairobi
SHAREHOLDERS of Equity Bank of Kenya on Friday gave a nod to the bank to acquire the Uganda Microfinance Limited (UML) â€“one of the leading microfinance companies in Uganda.
The nod effectively allows the take of 100% of the UMLâ€™s share capital. The move by the shareholders at the bankâ€™s annual general meeting at Nairobiâ€™s Kenyatta International Conference Centre followed the approval of the deal by the Bank of Uganda early last week.
The Bank of Uganda under the Microfinance Deposit-taking Institutions Act, 2003 granted the acquisition price of Ksh1.66b to be met through an allotment to the current owners of 8.067 million new ordinary shares of the bank at a price of Ksh206 each.
The approval paved way for the Central Bank of Kenya to give its verdict on the ground-breaking cross-border acquisition by Kenyaâ€™s leading bank in termâ€™s of market share and customer base.
The shareholders decision was necessitated primarily by the creation of new ordinary shares.
The shareholders gave the green-light based on their assent to the companyâ€™s expansion programme announced during a meeting convened last December to approve the injection of capital by its new strategic equity partner, Helios EB.
The deal marks the first time an indigenous Kenyan financial institution has made a 100% acquisition of such magnitude in the region.
UML is the dominant microfinance institution in Uganda, operating profitably with 26 branches and 14 offices.
Dr. James Mwangi, the Equity chief executive officer, said since the massive investment by Helios EB International in 2007, the bank had been actively engaged in looking for opportunities for regional expansion.
â€œThe acquisition of UML was in line with the bankâ€™s expansion strategy, and provided an optimum entry point into the Ugandan market,â€ Mwangi explained.
Mwangi said the bank envisaged that the current micro-finance business in Uganda was poised for exponential growth.
He disclosed that the plan was to extend UMLâ€™s offering into a full-scale commercial bank, subject to approval by the Bank of Uganda.
The acquisition of the UML by Equity comes at a time when the bank has embarked on an ambitious programme to consolidate its current growth by opening new branches in the country, and expanding into the East African region.
Last year, Equity posted an impressive performance, announcing a pre-tax profit of sh2.4b, a 116% increase up from sh1.1b recorded in the same period the previous year.