DEAD END

KCB aborts plan to buy off Tanzania's BanABC Bank

The transaction was envisioned to bolster the KCB's regional play and market share in Tanzania

In Summary
  • This follows a failure to receive certain regulatory approvals within the prescribed timeframe specified in the agreement.
  • The Kenyan bank is, however, expected to complete the acquisition of Rwandan Bank this month
KCB CEO Joshua Oigara
KCB CEO Joshua Oigara
Image: FILE

KCB Group has ended its acquisition bid for African Banking Corporation Tanzania Limited (BancABC).

This follows a failure to receive certain regulatory approvals within the prescribed timeframe specified in the agreement.

On November 26, 2020, KCB had announced that it had entered into a share purchase agreement with, among others, ABC Holdings Limited for the proposed acquisition of BanABC.

In May, the Kenyan bank gave a merger notification to Tanzania’s Fair Competition Commission (FCC) concerning its intention to acquire entire shares in BancABC.

According to KCB Group MD Joshua Oigara, certain conditions that are customary for transactions of this nature including receipt of all regulatory approvals were not met within the time frame.

''Without further agreement by the parties to extend the long-stop date, the agreement has been terminated and, accordingly, the parties will not proceed to complete the transaction as previously envisaged” Oigara said.

He added that despite the failure, the lender will continue pursuing attractive regional expansion opportunities in order to enhance its regional participation, accelerate growth and maintain sustainable long-term success in line with its growth strategy.

The transaction was envisioned to bolster the KCB's regional play and market share in Tanzania as part of the wider strategy to grow the contribution of its international businesses to the Group's profitability.

The BancABC Tanzanian subsidiary is owned by Tanzania Development Finance Company Limited (TDFL) which is also 68 per cent owned by African Banking Corporation Holding (ABCH) and the remaining shares are owned by the government of Tanzania.

KCB had inked the deal with Mara months after Equity Bank Group called off its plan to acquire four banking subsidiaries from Atlas Mara, saying it needed to preserve its capital in the wake of the Covid-19 pandemic.

The parties had initiated talks in April last year, but the negotiations targeting Atlas Mara’s units in Rwanda, Zambia, Tanzania and Mozambique dragged on until the pandemic hit.

The London-listed firm had said then it would seek another buyer for the four banks after the Equity deal collapsed.

KCB completed the purchase of the Rwandan bank in August, acquiring a 76 per cent stake in BPR from Atlas Mara (62 per cent) and private equity firm Arise (14 percent).

It plans to acquire the remaining 24 percent stake owned by other minority investors.

Last week, the bank's Chief Finance Officer Lawrence Kimanthi told the Star it plans to complete the merger this month and start rebranding in January.

He termed the acquisition as strategic, adding that it contributed Sh45 billion to the Group's balance sheet now at Sh1.12 trillion. 

"We are in the process of integrating BPR with KCB infrastructure and the full rebranding process is expected to commence in January,'' Kimanthi said.