Eyes on deal scene as I&M Bank sets aside Sh10bn for buyouts
The financial services sector may be set for a fresh round of acquisition deals as I&M Group plans to make an investment worth $75 million (Sh10.2 billion at the current exchange rate) as part of its growth strategy.
The lender is seeking approval from shareholders to enter into either an acquisition, merger, or joint venue agreement or set up a new (greenfield) venture — a form of market entry strategy where the parent firm establishes a subsidiary in a foreign country.
This comes after I&M Group PLC recorded Sh11.6 billion net profit for the full year ending December 2022, a 34 percent jump from Sh8.6 billion reported in 2021.
The company has set the move as part of the business for an annual general meeting (AGM) to be held on May 25, “that subject to all relevant regulatory approvals being obtained, the company be authorised to undertake an acquisition, a merger, enter into a joint venture agreement or set up a new (greenfield) venture where the value of such a transaction shall not exceed an amount of $75 million,” I&M Group stated in a notice of the AGM.
I&M Group plans to pay a dividend of Sh3.72 billion after announcing a first and final dividend of Sh2.25 per share for the year ended December 31, 2022, a 50 percent increase from the previous year.
The investment plans come as the lender continues to record improved performance from the acquisition of a 90 percent stake in Uganda’s Orient Bank Limited on April 30, 2021 which completed its first full year as part of the I&M Group in 2022.
Top lenders, including KCB, Equity, Co-operative Bank of Kenya and I&M have in the recent past made acquisitions within Eastern Africa and remain open to more deals using their sustained profitability and strong capital levels.
In the most recent deals locally, Somalia’s Premier Bank Limited this year completed its acquisition of a 62.5 percent stake in First Community Bank after the Central Bank of Kenya (CBK) approved the deal.
The acquisition of FCB by Premier Bank comes barely two months after the Central Bank of Kenya on January 23 approved the takeover of Kenya’s Mayfair Bank by Egypt’s leading private sector bank, Commercial International Bank (CIB).
CIB fully took over Mayfair, after purchasing the remaining 49 percent of its shares. It had previously purchased 51 percent of shares in 2020. MBL, which started operations in August 2017, operates five branches in Nairobi, Eldoret, and Mombasa.
Following the Mayfair buyout, the Cairo-based lender became the first Egyptian bank to establish a presence in Kenya. CIB is the leading private-sector bank in Egypt, with a total asset base of approximately Sh3.28 trillion ($24.18 billion).
It is listed on the Egyptian Stock Exchange and London Stock Exchange and trades over the counter on the New York Stock Exchange. It also has representative offices in the United Arab Emirates and Ethiopia.
I&M Group and subsidiaries — Tanzania, Uganda, Rwanda, and Bank One in Mauritius — recorded growth in net profit after an increase in non-interest income by 46 percent to Sh12.7 billion, largely driven by growth in fees and commissions and foreign exchange income.
I&M Group Plc, during the release of the results, said its Tanzania unit was focusing on robust growth and business efficiency in 2023 as it reports a 34 percent rise in profitability at the group level.
“The strong results posted in 2022 demonstrate that we are making good progress on our strategic plan to be Eastern Africa’s leading financial partner for growth. Looking ahead, we remain committed to driving sustainable growth, on delivering value to our customers and ultimately creating long-term value for our stakeholders," said Mr Daniel Ndonye, chairman of I&M Group. BY DAILY NATION
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