Mauritian bank eyes Kenyan market with Fidelity acquisition


Mauritian bank eyes Kenyan market with Fidelity acquisition
Photo// Courtesy

A Mauritius based financial services firm has announced plans to acquire Fidelity Commercial Bank by the end of the year.

SBM holdings, which is the second largest company listed on the Stock Exchange of Mauritius, plans to acquire the entire share capital of Fidelity as part of its growth strategy into the region.

The move implies that Fidelity Commercial Bank has ditched earlier plans to sell a significant stake to UK based private equity firm Duet for a reported Sh1.9 billion.

The acquisition is still pending regulatory approval from both countries.

SBM has committed to inject a further Sh1.4 billion to shore up the bank’s core capital.

“SBMH will acquire the entire share capital of FCB for Sh1.455 billion as growth capital. The acquisition is in line with SBMH’s regional expansion strategy into East Africa,” the group said in a cautionary statement to shareholders.

The proposed acquisition comes at a time smaller banks are in dire need of capital.

The Central Bank of Kenya (CBK) also issued a moratorium on issuance of new banking licenses, a factor that is likely to see more mergers and acquisitions in the market as pressure mounts on banks to shore up their capital.

Fidelity has been flirting with the CBK’s statutory requirements with the acquisition expected to bolster its operations.

According to the central bank, the entry of SBM Holdings will stir up the local banking sector and enhance competition.

“SBM Group will bring its experience and expertise from Mauritius and other markets, to enhance competitiveness and the resilience of Kenya’s banking sector. SBM Group is pursuing an international expansion strategy, and for the African region, it is anchored on Kenya as the entry point for Eastern Africa,” CBK said in a statement.

The group has operations in India, Madagascar and a representative office in Myanmar.

Fidelity, which is considered a tier three lender, began operations in Kenya in 1992 and is currently ranked 31 out of the 41 local banks with a 0.39 percent market share.

Fidelity currently has 14 branches spread across the country.

According to the CBK the deal is expected to be concluded by December 31.

The last bank to enter Kenya via acquisition was Nigeria’s Guarantee Trust Bank which bought Fina Bank back in 2013.

For Citizen TV updates
Join @citizentvke Telegram channel



Video Of The Day: Different journeys, same destiny: The story of top two candidates | KCSE 2020 |

Avatar
Story By Sophie Kinoti
More by this author

Leave a Reply

Your email address will not be published. Required fields are marked *