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Kenya-based financial services group, Britam Holdings, is on course to earn Ksh13.95 billion ($123.3 million) from the sale of a substantial stake in Kenya’s largest financial services group, Equity Group Holdings to the International Finance Corporation.
Information gathered by Billionaires.Africa revealed that the IFC, a member of the World Bank Group, revealed that it will acquire the 253 million shares in Equity Group Holdings from Britam at a price of Ksh55 ($0.486) per share based on the agreement with Britam, a diversified financial services provider co-founded by Kenyan businessman Peter Munga.
The transaction, which is subject to approval by the regulatory authorities, will be implemented in two tranches, as the IFC will acquire 164.5 million shares in Equity Group directly and 88.5 million shares indirectly through its IFC Financial Institutions Growth Fund LP.
The deal comes at a premium of nearly 11 percent on Equity Group’s share price of Ksh49.6 ($0.439) at the closing of the Nairobi Stock Exchange yesterday, Dec. 28.
As a result, Britam will pocket Ksh13.9 billion ($123.3 million) from the transaction compared to the Ksh12.5 billion ($110.5 million) that it would have earned at the prevailing market price.
Experts believe the transaction is a strategic move, as Britam is on course to unlock value from the James Mwangi-led Equity Group following its initial investment in the leading lender years ago.
As of August 2006, when Equity was listed on the Nairobi Stock Exchange, Britam held an 11-percent stake worth about Ksh900 million ($7.9 million)
The group over the years has earned dividends worth millions of dollars from its stake, in addition to the millions it has earned from the strategic sale of its shares spurred by the decision to reduce its risk exposure.
The conclusion of the deal will see the IFC join a long list of shareholders like Arise B.V., Stanbic Nominees and Equity Bank CEO James Mwangi, who holds a substantial 3.38-percent stake.
While the IFC is set to become Equity’s second-largest shareholder with a 6.7-percent stake, Britam is on course to boost its yearly earnings through its realized gains from the share sale.
Experts believe the 11-percent premium on the deal with the IFC will see the Kenya-based financial services group expand its gains by about Ksh1.5 billion ($13.3 million).
In the first six months of its 2021 financial year, Britam posted a profit of Ksh376.3 million ($3.3 million), up from the loss of Ksh1.63 billion ($14.4 million) that it posted during the same period in 2020.
The disclosure comes three days after a news report revealed that the group agreed to sell 4.201 percent of its 158.5 million shares in Equity Group Holdings to the IFC for an undisclosed fee.
