DRC: Following in Equity’s footsteps, KCB Group is moving into the Congolese market

By Aurélie M'Bida, Maher Hajbi
Posted on Tuesday, 9 August 2022 11:26

KCB Group has reached a definitive agreement with Trust Merchant Bank’s shareholders on 2 August 2022. © KCB Group

Determined to exploit new development opportunities, Kenya’s KCB Group wants to consolidate its presence in DRC by purchasing Trust Merchant Bank (TMB).

In the works for several months, the acquisition of Trust Merchant Bank (TMB) by Kenya’s second largest group, in terms of total assets ($6.9bn as of 31 December 2021), is in the home stretch. KCB and TMB executives have signed an agreement under which the Kenyan giant will acquire the Congolese bank. The deal is still subject to regulatory approval.

“This gives us a lot of room to accelerate our growth ambitions,” says Andrew Wambari Kairo, chairman of the KCB Group, who says he is delighted to be able to play “a catalytic role in DRC and East Africa’s economic development.”

Thus, KCB Group has acquired DRC’s third largest bank in terms of total assets estimated at $1.1bn in 2020, behind Rawbank ($2.8bn) and EquityBCDC ($2.5bn).

Two-step transaction

In detail, TMB’s management has agreed to sell 85% of the group’s shares as a first step. “With our knowledge of the local market, backed by the KCB group’s size and expertise, we should be able to increase our market share and returns,” says Robert Levy, chairman of the board of the Congolese Trust Merchant Bank group.

Now a majority shareholder in the DRC-based bank, the Kenyan giant, whose net profit reached $298m in 2021, is expected to acquire the remaining 15% by 2025. The transaction will be made with a cash payment for the shares based on TMB’s net asset value at the date of closing. A multiplication factor of 1.49 has also been included in the final agreement signed between the two groups.

Duel at a distance

The transaction is reminiscent of when the holding company Equity Group (EGH) acquired 66.53% of BCDC’s capital in August 2020 for $95m. The Congolese regulator gave the green light at the end of December for the group led by James Mwangi to merge its local banking network with the newly acquired institution, thus increasing its stake in EquityBCDC to over 77%.

While the local leader, Rawbank, chaired by Mustapha Rawji, still retains banking leadership in DRC, Mwangi at the helm of Equity still has his sights set on becoming DRC’s leading bank.

Meanwhile, KCB’s management has confirmed its pan-African ambitions. Already present in Tanzania, Uganda and Rwanda – whose local subsidiary recently merged with Banque Populaire du Rwanda (BPR) to form BPR Bank Rwanda -, the group led by Joshua Oigara since 2013, is attacking a terrain conquered by its compatriot Equity Bank Group, which is also ahead of it on the Kenyan market. Despite the fact that, according to the latest figures released by the Central Bank of Kenya for the year 2021, KCB has a narrow lead in terms of local market share, with 13.81% compared to Equity Bank Kenya’s 13.57%.

Following the recent acquisition of TMB, Kenya Commercial Bank now has access to a network of 110 branches and counters across DRC, which is Africa’s second-largest country with an estimated population of over 93 million. “Once completed, this purchase will complete the KCB group’s regional footprint with an asset base of $12.6bn and is expected to consolidate the group’s retail and corporate banking networks,” KCB management said.

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