Private equity fund Africinvest has completed the purchase of a 10.13 percent stake or 167.53 million shares in listed lender I&M Group from UK development finance institution British International Investment (BII), the firms announced on Tuesday.
The deal was first disclosed in November 2023, and the transaction subsequently received regulatory approval from the Competition Authority of Kenya (CAK) in March 2024.
It is valued at Sh6.5 billion, representing a significant premium on the current Sh3.43 billion valuation of the stake at the bank’s prevailing share price at the Nairobi Securities Exchange (NSE).
At Sh6.5 billion, the deal would value the bank at Sh64.17 billion, compared to the present market capitalisation of Sh33.82 billion at the NSE.
BII purchased its stake in I&M in April 2016, when it was known as CDC Group, making it the fourth largest shareholder in the lender behind Minard Holdings Limited, Tacoma Limited, and Ziyungi Limited, whose stakes sit at 21.6 percent, 18.4 percent and 17.8 percent, respectively.
“Having been a trusted equity partner to I&M for over seven years, today’s announcement represents a great outcome to BII’s engagement, as we exit to a like-minded partner with a focus on commercial sustainability and development impact,” said BII investment director Maximilian Biswanger in a statement on Tuesday.
The inclusion of a valuation premium in private deals is commonly used as a means to entice the seller to offload their stake, with the valuation dependent on a mix of factors including the potential income after the acquisition, valuation of similar deals, and other benefits such as seats on the board for the buyer.
For Africinvest, which is purchasing the stake through its wholly-owned special purpose vehicle known as East Africa Growth Holding, the deal represents a deepening of its foothold in the I&M Group, having previously acquired a 24.76 percent share in I&M Bank Rwanda in 2019.
According to CAK disclosures when it approved the sale, the transaction will confer East Africa Growth Holding rights on the appointment of board directors, development of business plans, and making significant changes to the bank’s senior management—effectively giving the PE fund indirect joint control with existing shareholders.
I&M was listed in June 2013 following a reverse takeover of City Trust Limited by I&M Bank Limited. The group now operates in five countries – Kenya, Tanzania, Rwanda, Uganda, and Mauritius—through a mix of subsidiaries, affiliates and joint venture investments.
In the year ending December 2023, the bank’s net profit grew by 12.7 percent to Sh12.62 billion and paid shareholders a dividend of Sh2.55 per share, or Sh4.22 billion in total.
