Steve Umdidha @UmidhaSteve

Kenyan lender, I&M Holdings PLC has acquired majority stake in Uganda’s Orient Bank Limited (OBL) from 8 miles LLP and Morka Holdings Limited exciting mergers and acquisitions (M&A) experts.

The deal announced yesterday will now see the lender control a 90 per cent majority stake in Uganda’s Orient Bank Limited in a transaction that was initially reported to cost I&M over Sh2 billion.

Mergers and acquisition costs (M&A) in the banking sector sits at its lowest ebb in eight years, with COVID-19 pandemic shocks sucking off funds.

Orient is the 12th largest bank and a licensed and established commercial bank in Uganda widening I&M Holding’s regional presence after Kenya, Rwanda, Tanzania and Mauritius.

I&M Holdings and Orient Bank Limited first signed an agreement in July 2020 for I&M Holdings PLC and the acquisition was completed last week on April 30, 2021 following regulatory approvals from the Central Bank of Kenya, Bank of Uganda, Capital Markets Authority of Kenya and the COMESA Competition Authority.

Missing link

“The move underscores I&M Group’s commitment to its growth and expansion strategy in Eastern Africa, where Uganda was the missing link in the Group’s strategic effort to set up its presence in all East African countries,” said I&M’s Group Executive Director, Sarit Raja Shah.

Through the deal, the bank will seek for opportunities to invest “at a local and regional level enabling the Bank to serve the needs of all customers, while promoting trade flows within the region.”

 “This acquisition is expected to give the Group greater capacity to grow profitably, through extending our network to our Regional customers. Further it demonstrates our continued leadership role in the industry across East Africa”, Sarit Raja Shah said.

Last year witnessed a surge in M & A activities in the local banking scene with some of the major deals including the buyout of Transnational Bank by Nigeria’s Access Bank, the acquisition of a 51 per cent stake in Mayfair Bank by Egypt’s Commercial International Bank (CIB) and the 90 per cent stake acquisition of Jamii Bora Bank (now Kingdom Bank) by Co-operative Bank.

Loss making Uganda Orient Bank reported a net loss of Sh30.6 million in the year ended December 2019 when its shareholder funds stood at Sh3.3 billion.

Its major shareholders include its vice chairman and founder Ketan Morjaria who is also the founder and significant shareholder in Kenya’s Credit Bank.

He has a 9.8 per cent stake in Credit Bank, according to the lender’s latest available disclosures.

“This acquisition marks a great milestone in the history of Orient Bank. We are proud to be integrating into a regional group like I&M Holdings PLC and this synergy will allow our customers to benefit from more seamless and superior banking products whilst continuing our tradition of trust,” said Morjaria in a statement yesterday.

Through the acquisition, I&M Group has acquired additional net loan assets of approximately Sh7.7 Billion, deposits of Sh 18.2 Billion, a customer base of close to 70,000, a staff component of 340 employees and a network of 14 branches and 22 ATMs across the country. The lender further aims to focus on mergers and acquisitions as part of its growth strategy.