Equity Group Holdings has announced that it will acquire 91.93 per cent controlling equity stake of Compagnie Générale de Banque, better known as Cogebank.
Cogebank is a public limited company licensed by the National Bank of Rwanda to provide banking services in the country.
The two signed a binding term sheet that upon completion of the transaction, EGH will pay an aggregate cash consideration of RWF 54.68 billion (USD48.1 million or Sh6.7 billion).
The merger would position Equity Bank as the second largest bank in Rwanda with a total combined assets market share of 18 per cent and a deposits market share of 19 per cent based on audited accounts as at December 31, 2022.
"The transaction would solidify Equity Group’s systemic status in the region with the amalgamated Rwanda subsidiary joining Equity Bank Kenya and Equity BCDC in the Democratic Republic of Congo as banks with the second largest market share in their respective markets,” reads a statement on the merger.
Equity Group Chief Executive Officer James Mwangi said an underpenetrated financial services sector with private sector credit and GDP being below 30 per cent provides a well-defined secular growth opportunity for the financial services group.
"Rwanda’s five-year average GDP growth rate at 6.5 per cent ranks it amongst the 10 fastest growing countries in the world,” Mwangi said.
"Its economic growth is expected to be supported by a continued ease of doing business, recovery of global travel that will underpin its tourism and Meetings, Incentives, Conferences and Exhibitions (MICE) strategy targeting Foreign Direct Investments, regional integration, supporting trade and increasing contribution to its manufacturing sector."
Mwangi added that strong local, national and regional commercial banks will be the foundation of Regional and International Financial Services Center status.
"This acquisition and proposed amalgamation of Cogebanque with Equity Bank Rwanda will result in a strengthened National and Regional Commercial bank in line with and underpinning Rwanda’s aspirations of being an international financial and business center,” Mwangi said.
The acquisition and amalgamation of Cogebanque will help shore and transform Equity Rwanda’s economies of scale with the resulting 54 per cent growth in balance sheet, positioning it to play a more meaningful role across the economy and the region in line with Equity Group’s Africa Recovery and Resilience Plan (ARRP).
Rwanda’s Minister of Finance and Economic Planning Uzziel Ndagijimana said that Equity Group's acquisition of Cogebanque reflects the trust and confidence placed in Rwanda's economic prospects and the resilience of the financial industry
"The consolidation of these two institutions will undoubtedly contribute to the growth and stability of Rwanda's banking sector, enabling us to provide better financial services to our citizens and facilitate economic empowerment," Ndagijimana said.
The larger balance sheet with an enhanced single lending obligor limit will better support the financing needs and requirements of businesses in the high growth sectors, further enhancing capacity for syndicated lending with other large banks in Rwanda to support economic growth of Rwanda as envisioned under Vision 2050 and facilitate growth in key sectors of Tourism, MICE and manufacturing.
Equity Group’s investment and capital allocation is guided by the Company’s strong growth history and robust outlook.
Rwanda has been Equity Group’s highest return business whilst generating high growth and sustained efficient operations.
Through combining Cogebanque’s existing network of 28 branches with that of Equity Rwanda, the combined bank will achieve countrywide distribution and coverage while acquiring and strengthening its Micro-, Small- and Medium-sized Enterprise (MSME) franchise, which is its core strength.
The MSME segment of the Rwanda economy will greatly benefit from Equity’s strong product offering and innovative technology solutions for the segment.
