IFC to buy stake in Orient Bank

Mar 12, 2008

THE International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, plans to acquire a stake in Orient Bank. In a statement, IFC said the equity investment was proposed by a group of investors.

By Peter Kaujju

THE International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, plans to acquire a stake in Orient Bank. In a statement, IFC said the equity investment was proposed by a group of investors.

“The proposed investment comprises an equity investment of $9m (sh15.3b) for a stake of 15% and an increase in the existing trade finance facility by $3m (sh5b) in Orient Bank,” said the statement.

The other proposed investors are DEG, the investment arm of the Federal Republic of Germany, and Bank Muscat International.

Sabre Capital Worldwide, a private equity management services company, will sign a management services agreement with the bank to strengthen its activities and facilitate its expansion within East Africa.

Sources said there was a high-level meeting held in Kampala about the deal last week, in which it was decided that Sobre acquires 70%, International Finance Corporation 15%, while 15% will be retained by the shareholders.

But Shamsher Khemani, the Orient Bank acting chief executive officer, explained that IFC had showed interest in the bank but hastened to add that no deal had been concluded yet.

“Everything is in the air right now. I will shortly have the details whether there is a deal or not. It is in our interest to let all our esteemed customers and partners know of any new developments,” Khemani said.

Last week, Orient Bank announced a sh8b growth in profits before tax in 2007, a 24% increase from the previous year.

Assets increased by 31% to sh182.23b, from sh139.15b, while customer deposits grew by 37% to sh138.42b, from sh101.37b in 2006.

The bank’s net interest income increased by 18% to sh10.48b from sh8.88b in 2006, while the shareholders’ fund increased to sh28.03b in 2007 from sh23.60b.

Competition in the banking industry has been stepped up with the entrance of Kenyan giant, Kenya Commercial Bank and Nigerian-based United Bank of Africa.

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