Kenya: Centum to sell Sidian Bank stake to Access Bank
Kenyan investment company Centum has entered into a binding agreement with Access Bank regarding a proposed purchase by Access Bank of Centum’s entire equity stake in Sidian Bank.
Centum holds 83.4% of the issued shares of Sidian, directly in its own name and indirectly through its wholly owned subsidiary, Bakki Holdco Limited. The transaction is for the total sum of KES 4.3 billion (c. $36.8 million) and is subject to customary adjustments agreed by the parties. It is expected that in due course, Sidian will be merged with Access Bank’s subsidiary in Kenya to create a stronger banking institution positioned to serve the Kenyan market.
The completion of the transaction is subject to receipt of customary regulatory approvals in Nigeria and Kenya.
Sidian is an SME and trade finance bank that has grown its balance sheet by over 70% from KES 19 billion (c. $162.5 million) in December 2012 to KES 43 billion (c. $367.7 million) as of March 2022 after Centum’s investment. Additionally, Sidian’s profitability has improved since 2019, with a record profit of over KES 486 million (c. $4.2 million) generated in 2021 while the NPL ratio improved from 20.6% in 2017 to 11.7% as of March 2022, comparing favourably to Kenya’s current national average of 14%.
Speaking on the proposed transaction, Centum’s CEO, Dr. James Mworia said, “This transaction stands as one of the largest private equity transactions in East Africa and reflects a strong commitment by Access Bank to the future of the Kenyan economy. It advances Centum’s vision to be Africa’s foremost investment channel and bolsters our track record of attracting foreign investors into Kenya and the region to invest in extraordinary enterprises. The proceeds from the sale will enable Centum to continue investing across strategic sectors in Kenya and the East African region. We are particularly pleased to be exiting Sidian at a price which represents a 59% premium to the book value and confirms the deep discount embedded in the valuation of the assets in our book.”
Commenting on the transaction, the CEO of Access Bank, Roosevelt Ogbonna said, “The transaction builds on our earlier acquisition of former Transnational Bank Plc (now Access Bank Kenya) and underscores our drive to strengthen our presence in Kenya which is a key African market that fits into our core strategic focus for geographic earnings, growth and diversification. Through this transaction and the subsequent merger with Access Bank Kenya, we will be well placed to promote regional trade finance and other cross border banking services, by leveraging our presence in key global trade corridors and the broader East African Community and COMESA regions. The proposed combination with Access Bank Kenya would undoubtedly catapult us to a strong Tier 2 bank contender in the Kenyan market with enhanced capacity to play a more impactful role in the growth of the Kenyan economy and deliver increased profitability to our shareholders.”
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