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Dutch bank seals DFCU merger

By Vision Reporter

Added 3rd May 2013 02:49 PM

Dutch Rabo bank has completed the purchase of 27.54% ownership of the Development Finance Company of Uganda (DFCU).

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Dutch Rabo bank has completed the purchase of 27.54% ownership of the Development Finance Company of Uganda (DFCU).

By Samuel Sanya

Dutch Rabo bank has completed the purchase of 27.54% ownership of the Development Finance Company of Uganda (DFCU), as a one week voluntary suspension from trading on the share markets was lifted on Thursday.

Actis, a London based Equity firm sold a 45% stake in the Development Finance Company of Uganda (DFCU) bank to the Rabo development B.V and Norfund, a Norwegian development agency for sh111.9b (approximately $44m).

The transaction is subject to a 15% withholding tax payment worth sh17b to the Uganda Revenue Authority.

The merger is the first ever divestiture by a listed private company. Kenneth Kitariko, the African Alliance Uganda boss notes Uganda’s share markets are now ready for big business adding that the merger will improve DFCU’s technical capabilities.  

“The local share markets are now capable of handling large transactions in an efficient and transparent way. We would like to see more infrastructure bonds and listed companies on the share markets,” Kenneth Kitariko, the African alliance Uganda head said.

“Uganda’s securities markets now have the ability to raise large sums of capital for investors. We expect that more companies will use equity as opposed to getting bank loans,” he added. 

Kitariko made the comments at a media briefing by officials from Rabo bank, DFCU, USE and the Capital Markets Authority (CMA). The DFCU delegation was led by Board Chairman, Samuel Kibuuka and Non Excutive director Elly Karuhanga.  

Actis retains a 15% stake in DFCU bank after shedding a 27.54% stake to Rabo Development B.V and 17.48% to Norfund.  Minority Ugandan shareholders hold 39.97% of DFCU bank.  

Japheth Kato, the Capital Markets Authority (CMA) boss noted that the transaction will improve the corporate governance of DFCU bank and set positive precedent on the Ugandan share markets.

Representatives from Rabo bank and Norfund will join the DFCU board to increase oversight of the banks activities.

Niels Berendsen executive director Rabo bank noted that the bank will devote its efforts to building a local agricultural finance scheme of farmers and buyers in line with its global focus on agriculture.  

“We want to accelerate inclusive banking in Uganda through the Agricultural sector. We have more than 150 years’ experience in agricultural finance which we intend to deploy in Uganda through DFCU bank,” he said.

Juma Kisaame, the DFCU bank managing director noted that the merger establishes the bank as a major player in the banking sector. The bank is set to open a new agricultural finance division to increase funding to the sector.

“This transaction enables the USE to tap into 75% of the Ugandan population that is currently employed in agriculture. We are expanding participation and knowledge of the share markets to more Ugandans as DFCU targets the farmers,” Joseph Kitamirike, the USE boss said.

He also noted that the timeline for the much awaited electronic share trading system has been extended due to technical glitches; a new date for the system will be announced later this month.   

The electronic system integrates the share markets and the banking system making it easier for the public to purchase and sell shares. The system was successfully tested during the November 2012 UMEME IPO.

The South African equity markets, which operate through an electronic trading system, have a daily turnover of over $1b (sh2.6trillion), over 100 times the USE’s daily turnover.  

“We will have the most technologically advanced trading platform in Africa in 2013. The next IPO (Initial Public Offer) will be carried out electronically,” Kitamirike pointed out recently.


Dutch bank seals DFCU merger

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