• Equity Group, Kenya's second biggest bank by assets, said it would issue 252,482,300 new shares.
• The deal is subject to regulatory approvals in the various countries and once finalised,
Kenya's Equity Group Holdings said on Tuesday it was in discussions with London-listed financial services firm Atlas Mara Limited about acquiring stakes in banks in Rwanda, Zambia, Mozambique and Tanzania.
Equity's announcement marks the third major deal among lenders in Kenya since the government capped commercial lending rates in 2016, crimping their profit margins and forcing them to look for survival strategies, including consolidation.
It said it was entering transaction agreements to acquire via a share swap 62 percent of the share capital of Rwanda's Banque Populaire du Rwanda and 100 percent of African Banking Corporation of Zambia, African Banking Corporation Tanzania and African Banking Corporation Mozambique.
Equity Group, Kenya's second biggest bank by assets, said it would issue 252,482,300 new shares, representing 6.27 percent of its expanded share capital in consideration of the shares Atlas Mara owns in the target banks.
"This implies that the monetary value of the consideration to be paid is the equivalent of 10.7 billion shillings (equivalent to approximately $105.4 million)," Equity said.
The deal is subject to regulatory approvals in the various countries and once finalised, Atlas Mara would become one of Equity's shareholders, it said.
Equity added it may also seek to buy additional stakes in Banque Populaire du Rwanda from some or all of the remaining shareholders.
Last week, Kenya's biggest lender by assets KCB Group, offered to buy National Bank of Kenya through a share swap.
CBA Group, a privately held bank, is in the process of merging with NIC Bank to form the third biggest bank by assets in East Africa. There have been other smaller transactions including Diamond Trust Bank's acquisition of Habib Bank Kenya in 2017.