KCB plan to take over of DRC's Trust Merchant Bank gets shareholders’ nod

KCB Group PLC Chairman Andrew Wambari Kairu and Oliver Meisenberg, the Chief Executive Officer of Trust Merchant Bank.

KCB Group PLC Chairman Andrew Wambari Kairu and Oliver Meisenberg, the Chief Executive Officer of Trust Merchant Bank (TMB) sign the documents to acquire a majority stake at TMB.

Photo credit: Pool

What you need to know:

  • This makes KCB the second Kenyan lender to enter the populous DRC market after rival Equity Group.
  • KCB last month entered a definitive agreement with shareholders of TMB with the transaction expected to close in the third quarter of 2022.
  • Once the acquisition of TMB is concluded, it will complement KCB’s regional footprint with an asset base of over Sh1.5 trillion.

KCB Group shareholders have approved the lender’s proposed entry into the Democratic Republic of Congo (DRC) through the acquisition of a majority stake in Trust Merchant Bank (TMB).

This makes KCB the second Kenyan lender to enter the populous market after rival Equity Group.

KCB last month entered a definitive agreement with shareholders of TMB with the transaction expected to close in the third quarter of 2022.

“The shareholders’ nod is a major milestone for us to accelerate the acquisition process which will allow us to scale up our balance sheet, and revenue streams and contribute positively to diversification objectives. 

“KCB will be able to rapidly establish its presence within DRC by leveraging on TBM’s 18-year operational history and vast branch network,” KCB Group chairman Wambari Kairu said after an extraordinary general meeting of shareholders in Nairobi yesterday.

Sh1.5 trillion asset base

Once the acquisition of TMB is concluded, it will complement KCB’s regional footprint with an asset base of over Sh1.5 trillion.

“The approval of the transaction demonstrates the confidence our shareholders have in the financial and strategic benefits of the transaction and the value it provides our regional clients and communities” KCB Group chief executive officer Paul Russo said.

KCB said last month that the deal will see it acquire 85 per cent of the shares in TMB while the existing shareholders will continue to hold the balance for a period of not less than two years after which KCB will acquire their assets.

“KCB will pay a cash consideration for the shares based on the net asset value of TMB at the completion of the proposed transaction, and using a price to book multiple of 1.49” it added when it revealed the deal in August.

The deal now means KCB will have a presence in eight countries: Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, DRC and Ethiopia where it runs a representative office.

KCB’s latest acquisition comes barely a year after its Rwandan unit last year completed the purchase of Banque Populaire du Rwanda (BPR), Rwanda’s second-largest bank. The deal made the lender the majority shareholder in the bank. In April, KCB Rwanda merged with BPR to form BPR Bank Rwanda Plc. 

At the time of the Rwandan acquisition, KCB announced entry plans into Tanzania by purchasing a 100 per cent stake in Banking Corporation Tanzania (BancABC).

KCB, however, later cancelled the planned acquisition citing failure to be granted regulatory approvals in time.

Kenyan banks have embarked on an expansion drive in the six East African Community countries to capitalise on the growing cross-border trade.

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