BREAKING! Kenya’s I&M Holdings PLC to acquire Uganda’s Orient Bank

A Kenyan firm I&M Holdings PLC has issued a cautionary announcement advising its shareholders of a proposed transaction between the bank and Uganda’s Orient bank Limited which may affect the value of its shares.

In the proposed transaction, I&M plans to acquire 90% of the ownership of Orient Bank.

“Shareholders of I&M Holdings Plc are advised that the company has on the 17th July 2020 entered into an agreement with the shareholders of Orient Bank Limited for the sale and purchase of incorporated shares comprising 90% of the issued share capital of Orient Bank Limited” reads the announcement.

According to company statements of 2019, Orient Bank owns a total asset base of UGX 814 billion.

The proposed transaction is subject to regulatory and corporate approval from Ugandan Central Bank and Kenyan Central Bank the Capital Markets Authority and company shareholders.

Further details of the transaction will be made available to the shareholders in the due course, the letter said. I&M Holdings is part of the I&M Group which comprises of banking entities in Kenya, Tanzania, Mauritius, and Rwanda.

If the transaction goes through, it will be the second acquisition of a bank in Uganda this year. On July 1, 2020, the merger of NC Bank and Commercial Bank of Africa was completed with the formation of NCBA Bank Uganda.

I&M Holdings Limited is not new to acquisitions in Uganda.

In 2016, I&M Holdings Limited acquired 65 per cent shareholding in Burbidge Capital Group, a financial advisory firm. After the acquisition, Burbidge Capital was renamed I&M Burbidge Capital.

Orient Bank Limited launched its services in Uganda in 1993. In 1996, Orient bank opened a branch in Jinja, the first outside Kampala. The bank then acquired Trans-Africa Bank Limited in 2002, which had been declared insolvent by Bank of Uganda.

Through its history, the bank has gone through several ownerships by different entities and individuals. The last acquisition was by the London-headquartered private equity fund 8 Miles, founded by musician Bob Geldof, who acquired a 42 per cent stake in Orient Bank (U) Ltd in 2015. The founders of the bank, led by Ketan Morjaria, hold 49 per cent in the bank.

The remaining shareholding is by individuals Alemayehu Fisseha, the owner of Prime General Supplies, and the Ugandan-based Chinese manufacturer and property developer, Zhong Shuang Quan – each with 4.5 per cent.

In 2019, the bank struggled to make money, turning in a loss of 1 billion Uganda Shillings from a 5.6 billion Shillings profit registered in 2018. Its assets grew to 814 billion Shillings in 2019 from 749 billion Shillings in 2018, according to published financial results.