Equity Bank Partner Gets Green-Light

Equity Bank, Kenya's retail banker, has received regulatory approval from both the Central Bank and the Capital Market's Authority to proceed with a deal signed recently with Helios EB investors, its new Strategic Equity Partner (SEP).

But the deal will have to wait for further approval from the Bank's over 7,000 shareholders, expected to meet at an extra ordinary general meeting on later this month. Helios is an African capital management group.

The decision of the shareholders is needed mainly to approve creation of 90,516,255 new ordinary shares.

"The meeting will provide the board with an opportunity to discuss the terms of the new investment with the shareholders," Mr. Alex Muhia, Equity Bank's general manager said in a statement.

If approved, Helios EB will be the single largest shareholder with a subscription of 90 million new ordinary shares priced at a premium of Kshs 122 (US$ 1.9) per share, entitling it to a 24.99 per cent stake in the bank.

The deal will also inject a cool Ksh11 billion (US$174.6 million) as the bank's share capital.

Equity says it is banking on Helios' financial muscle, solid international backing and successful forays in Africa to support and sustain the company's expansion program.

Equity Bank is Kenya's leading bank with a core capital base of Kshs 14 Billion (US$222.2 million) with 70 branches countrywide and under the program, more are expected to open before end of year and next year.

Dr. James Mwangi, the CEO, last week praised the approval of the regulators, saying it is a boost to the bank. He said he was also optimistic the Bank's shareholders would give a green-light to the deal.

"The Helios partnership is in tandem with the Bank's growth strategy and that the choice of a strategic equity partner was based on the premise that Equity is a developmental Bank whose Micro finance model has succeeded and the fact that the partners have a strong bias for socio-economic development of African countries" he said.

Under the deal, the new investors will get a non-executive seat on the board but will not participate in any executive role at management level.

"This is a vote of confidence for the Bank and also the country," said Mwangi.

Equity Bank recently posted an impressive 98 per cent growth in pre-tax profit in its third quarter report with Kshs. 1.53 billion (US$20.6 million) more than double the Kshs. 773 million (US$ 12.3 million) for the same period last year.

The bank has also recently collected a series of accolades at annual Banking Awards, including Best Bank in Micro Finance, Best Bank in Retail Banking, the fastest growing Bank and the 2nd Best Bank overall.

Equity's business model has caused ripples in the Kenyan banking sector with many banks scrambling for a share of the market.

With a customer base that currently stands at over 1. 8 Million, the bank has a large slice of the banking market approximated at 41%.