Mauritian Bank Begins East Africa Expansion With Kenya Buyby
SBM in talks with banks in four other African countries
Chairman says new management to be introduced at Fidelity
SBM Holdings Ltd., Mauritius’s second-biggest lender, said it’s acquiring Fidelity Commercial Bank Ltd. of Kenya to kick off an expansion in East Africa that will target four more countries.
The bank is buying FCB’s entire share capital for 100 shillings and injecting 1.46 billion shillings ($14.3 million) of new capital, Port Louis-based SBM said in a statement on Tuesday. The Central Bank of Kenya expects the transaction to be concluded by Dec. 31, it said in a separate statement.
“Kenya is a hub for East Africa,” Chairman Kee Chong Li Kwong Wing said in an interview at his office in the capital, Port Louis. “Once this acquisition goes through all regulatory procedures, we shall go to neighboring countries,” including Uganda, Tanzania, Zambia and Rwanda, where it’s already in talks, he said.
SBM, which competes with Mauritius’s biggest lender MCB Group, plans to double in assets and net income by 2020 under a plan initiated last year. The lender has total assets of 146.2 billion rupees ($4.1 billion) and is forecast to report net income of 2.9 billion rupees, according to data compiled by Bloomberg.
The bank already has a presence in India and Madagascar, and obtained a license for the Indian Ocean archipelago of Seychelles in March. Shares of SBM dropped 0.3 percent to 6.94 rupees, extending its drop this year to 2.3 percent.
“With the saturation of the local banking market, we see our growth abroad, in particularly in Africa,” Li Kwong Wing said.
With 14 branches in Kenya, Fidelity is one of Kenya’s smallest lenders, according to central bank data. It has assets of 15 billion shillings and posted a loss of 277 million shillings last year, the central bank said in its latest annual report.
“We will recruit a new local management to take over,” Li Kwong Wing said.
Fidelity Managing Director Rana Sengupta didn’t immediately respond to an e-mailed request for comment.
In March, Fidelity agreed to a 1.9 billion-shilling injection by London-based Duet Private Equity Ltd. to double its capital base. That announcement came after the central bank denied speculation on social media in Kenya that Fidelity was about to be placed under statutory management.
The central bank welcomed the acquisition.
“SBM Group will bring its experience and expertise from Mauritius and other markets to enhance competitiveness and the resilience of Kenya’s banking sector,” it said.