Equity Group cancels Ksh.10B Atlas Mara acquisition deal

Equity Group has cancelled the proposed transaction for the acquisition of Atlas Mara banking businesses in Rwanda, Tanzania, Zambia and Mozambique.

In a notice issued Tuesday, the bank said it has mutually agreed to terminate ongoing discussions highlighting shocks brought forth by the COVID-19 pandemic.

“By way of update, Equity Group Holdings has continued to engage with Atlas Mara (ATMA) regarding the Proposed Transaction or a variant of it. The board of directors have however considered the events that have taken place since the date of the above public announcement and particularly the effects of the COVID-19 pandemic to both the world and the economies in which the Group entities operate,” the lender noted.

“After careful consideration, Equity Group and ATMA have mutually agreed to discontinue discussions on the Proposed Transaction, or a variant of it, for the foreseeable future.”

Equity Group has termed the move as part of the lender’s decision to refine strategy given the COVID-19 pandemic in a move that has also seen the suspension of its annual Ksh. 9.5billion shareholder pay-out.

“At the same time management will continue to place focus on accelerating the push to digital channels and growing the Equity Group’s various non-funded income franchises while re-evaluating the acquisition of new businesses where significant capital injection and managerial attention is required,” the lender added.

The COVID-19 pandemic has shaken up Kenya’s second largest lender by asset base as it registered a 14.5 percent dip in earnings through the first quarter of 2020 to Ksh. 5.3billion from higher loan-loss provisions.

The deal if completed would have seen Equity Group acquire 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda and 100 percent of African Banking Corporation Zambia, Tanzania and Mozambique through a share swap transaction.

Equity has however left out an update to its proposed purchase of a controlling stake in the Commercial Bank Congo, a transaction first announced in September 2019.

The pull back by Equity on the deal puts brakes to the lender’s plan of growing into a pan-African outfit and further slows down the pace of growth in assets which were treading towards the Ksh. 1trillion.

Equity Group’s balance sheet rose by 2.9 percent in three months through March to Ksh. 693.2billion.