In regional growth drive, KCB Group buys out DRC-based Trust Merchant Bank (TMB)
The Democratic Republic of Congo (DRC) is turning out to be the hunting ground for Kenyan banks seeking to scale their regional presence with the latest move by KCB Group to acquire a majority stake in Congo-based Trust Merchant Bank (TMB).
The deal, which is expected to be completed by September, subject to regulatory, shareholders, and other approvals, will see KCB acquire TMB, the first bank in the market to introduce mobile banking services, and more recently the first to launch lease financing.
KCB said the agreement will see her take up the balance of the shares, or 15 percent stake, in a period of not less than two years.
KCB will pay cash consideration for the shares determined 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.
TMB, a public company limited by shares, is one of DRC’s largest banks with US$1.5 billion in total assets. TMB has a strong offering in retail, SME, corporate, and digital banking channels. It has over 110 branches and numerous agency banking outlets spread across DRC.
Rival Equity Group has been in the DRC market since 2015 when it bought 86 percent shareholding of ProCredit Bank and rebranded it to Equity Bank Congo two years later.
Equity Bank acquired Belgian tycoon George Forrest’s 66.53 percent shareholding in Banque Commerciale du Congo (BCDC) for Kes10.4 billion ($95m) and merged it with Equity Bank Congo forming Equity BCDC targeting small businesses, firms in the extractive industry as well as retail clients.
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KCB’s acquisition is aligned with the Group’s strategic focus of scaling its regional presence. Once completed, this acquisition will complement KCB Group’s regional footprint with an asset base of Kes1.5 trillion (USD 12.6 billion) and is expected to strengthen the Group’s retail and corporate banking franchises.
“This is part of our ongoing strategy to tap into opportunities for new growth while investing in and maximizing returns from the Group’s existing businesses. It gives us strong headroom to accelerate our growth ambitions to deliver better value for our shareholders and to bolster the push for deeper financial inclusion and social and economic transformation in Africa and beyond. We are excited that we can now play a role in catalyzing DRC’s and indeed East Africa’s economic expansion agenda,” said Andrew Wambari Kairu, KCB Group Chairman.
“We are very excited about the opportunities KCB offers in this transaction and we are proud to bring our unique DRC insights and experience to the KCB Group. We believe that by combining our local knowledge and standing with the size and expertise of KCB Group, we should be able to increase market share and shareholder value through unlocking our synergies and business opportunities,” said Robert Levy, TMB Chairman.
With the acquisition, TMB customers will benefit from best-in-class digital capabilities, transactional banking solutions, trade finance expertise and access to regional business opportunities offered by KCB Group.
TMB will give KCB Group access to Africa’s second-largest country with a population of over 93 million people.
In the three months ending March 2022, KCB Group PLC profit after tax surged 54.6 percent to Kes9.9 billion. This rise from Kes6.4 billion in a similar period last year was boosted by growth in total income and a reduction in loan loss provision.
Revenues increased by 26 percent to Kes 29.0 billion on account of an increase in interest income, an increase in non-funded income from lending activities and service fees, and a 21.1 percent rise in earning assets.