Kenya-based financial services group Equity Group Holdings Limited has disclosed plans to acquire a local rival as part of its growth strategy in East Africa if acquisition opportunities emerge.
According to a recent report, Equity Group CEO James Mwangi revealed that opportunities through acquisitions in the Kenyan market are monitored closely and the group may choose to adopt an approach that had been focused on countries like Democratic Republic of Congo and Rwanda.
Equity Group is a leading financial services holding headquartered in Nairobi, the capital and largest city of Kenya.
Under the leadership of Mwangi, the holding has grown into one of the largest financial services groups in East Africa, operating through its subsidiaries in Uganda, Tanzania, South Sudan, Rwanda and Democratic Republic of Congo, in addition to its Kenyan operations.
Early this year, the company acquired a 7.7-percent stake in Equity Bank Congo (EBC) from German sovereign wealth fund KfW at Ksh996 million, bringing its shareholding in EBC to 94.3 percent.
The decision to expand operations in the local market by way of an acquisition sparks a change in the group’s traditional policy, as it has never acquired any lender on the local market.
As an investment case supporting the move, Mwangi noted that acquisitions in other market segments led to the company gaining a significant 27-percent market share in the DRC, compared to the 15-percent organic growth that it recorded in Kenya.
As of June 30, the value of Equity Group’s assets was pegged at Ksh1.12 trillion, up from the Ksh746.5 billion that was reported last year.
Aside from the increase in the fair value of its investment securities, the strong growth in its assets value was driven by the acquisition of a 66.5-percent stake in Belgium’s BCDC last August and the acquisition of an additional interest in EBC from KfW.
So far, Equity Group has accumulated Ksh136.43 billion as retained earnings over the years, while its shareholder equity amounts to Ksh155.07 billion.
In the first half of 2021, it reported a 98-percent growth in profit from Ksh9.1 billion in 2020 to Ksh18 billion in 2021.
Figures contained in its half-year report revealed that it has KSh39.81 billion in cash. This put the group in a strong position to pursue acquisitions in key companies in line with its regional growth strategy.
Aside from its plans to scale its market share and activities through acquisitions, the Mwangi-led group has also recently set aside Ksh500 billion to finance businesses seeking to trade or invest in Africa as part of a move to expand its operations and its presence across the continent.