NAIROBI Kenya, June 14 -Equity Group Holdings Plc on June 14 announced its intention to acquire Compagnie Générale de Banque (Cogebanque) PLC Ltd in Rwanda.
The two banks signed a binding term sheet that will mean that, upon completion of the transaction, Equity Bank will pay an aggregate cash consideration of USD 48.1 million (RWF 54.68 billion) for a 91.93 percent controlling equity stake.
“The acquisition of the fifth largest bank, and subsequent amalgamation of the business with that of Equity Group’s existing banking subsidiary in Rwanda, would position Equity Bank as the second largest bank in Rwanda after the merger with a total combined assets market share of 18 percent and a deposits market share of 19 percent based on audited accounts as at 31st December 2022,” Equity said in a statement.
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.
Dr James Mwangi, the Group Managing Director and CEO said the Equity Group’s investment and capital allocation is guided by the Company’s strong growth history and robust outlook.
“Rwanda’s 5-year average GDP growth rate at 6.5 percent ranks it amongst the 10 fastest growing countries in the world,” he said.
He added: “Rwanda’s 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.”
According to Mwangi, an underpenetrated financial services sector, with private sector credit and GDP being below 30 percent provides a well-defined secular growth opportunity for the financial services Group.
Dr Uzziel Ndagijimana, Rwanda’s Minister of Finance and Economic Planning said Equity Group’s acquisition of Cogebanque reflects the trust and confidence placed in Rwanda’s economic prospects and the resilience of our 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,” Dr Ndagijimana said.
Rwanda has been Equity Group’s highest return business whilst generating high growth and sustained efficient operations. The acquisition and amalgamation of Cogebanque will help shore and transform
Equity Rwanda’s economies of scale with the resulting 54 percent 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).
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.
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.
Mwangi also said the 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.
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