The Competition Authority of Kenya (CAK) has approved the proposed acquisition of a 51 per cent stake in SMEP Microfinance Bank by Hope Advancement Inc, a US Christian institution.
The US faith-based nonprofit organisation is set to acquire the stake in SMEP Microfinance Bank for $4.65 million (Sh64.22 million), deepening acquisitions in Kenya’s microfinancing sector.
“Pursuant to the provisions of section 46 (6) of the Competition Act, 2010 (the Competition Act), it is notified for general information, that in the exercise of the powers conferred upon the Competition Authority of Kenya by section 46 (6) (a) (ii) of the Competition Act, the Competition Authority of Kenya has authorised the proposed transaction as set out herein,” said CAK acting director-general Adano Roba.
The deal would bring some relief for SMEP which has faced capital and liquidity challenges for over a decade, making it difficult to invest in new business models to meet the changing customer preferences. The deal, therefore, presents an opportunity to unlock growth.
SMEP shareholders in January, in an extraordinary general meeting, passed a resolution to sell the 51 per cent stake to Hope International pending regulatory approval.
SMEP was founded by the National Council of Churches of Kenya (NCCK) in 1975 and received a deposit-taking microfinance licence from the CBK in 2010.
The NCCK has been shedding off shares to attain the 25 per cent threshold required under CBK regulations.
The latest deal will see NCCK’s majority stake diluted from 71.1 per cent to 34.8 per cent, while the minority shareholders’ stake will drop to 14.2 per cent from 28.9 per cent.