Equity Bank Group has made an entry into the Democratic Republic of Congo through acquiring a controlling interest in ProCredit Bank.
Equity will pay about Sh6 billion to gain a 79 per cent control of the seventh largest bank in the country.
Making the announcement Tuesday, Equity Group chief executive James Mwangi said the DRC presented huge opportunities for the bank owing to a large population of more than 85 million people, most of whom are excluded from formal banking services.
“The bank is well positioned for growth in the vast and resource-rich country as the market scales up its banking penetration across the over 85 million population from current levels of under 4 per cent,” noted Mr Mwangi.
The move comes less than two months after the bank announced it would spend Sh200 billion in its pan-African expansion plans that would see it venture outside its East African stronghold to Southern and West Africa.
The investment in ProCredit, the DRC-based German owned small and medium enterprise (SME) lender, marks its first step in a journey to establish its presence in 15 new African countries in a decade. The transaction is subject to regulatory approvals in the two countries.
Part of the Sh6 billion investment will go towards doubling the bank’s branch network to 30 from the current 15.
“After evaluating various bids, ProCredit Holdings was clear that Equity Group provided the right strategic fit to support the further development of ProCredit Bank Congo S.A. We are very confident that Equity Group will offer excellent prospects for our clients, staff and most importantly, for DRC’s economy,” said ProCredit Holdings Manager Helen Alexander.
Established in 2005, ProCredit has net assets of $25 million (Sh2.5 billion) and a customer base of over 170,000.
Some of its shareholders include the German Development Bank (KfW) and the International Finance Corporation (IFC), who will hold 12 per cent and 9 per cent shareholding respectively in the new structure after the acquisition.
Those that have exited include Stichting Doen (which held 12 per cent) and Bio (which had 6 per cent).
Equity’s next move will be to expand to Zambia, Malawi, Angola, Mozambique and Zimbabwe in the Southern Africa region, as well as Ghana, Cameroon and Nigeria in West Africa.
Ethiopia and Burundi are also on its expansion radar.
In its growth journey, it will deploy mergers and a mix of acquisitions for the relatively large countries and greenfield developments for the smaller ones.
Currently, the lender has footprints in Kenya, Uganda, Tanzania, Rwanda and South Sudan.
Save for the Ugandan operation, which was started by way of acquisition, all other outlets in East African countries were launched from scratch.
It is targeting to grow its customer base to 100 million in 10 years from about nine million currently.