Fidelity Commercial Bank has received Sh1.9 billion from Duet Private Equity for regional expansion and to shore up the bank’s core capital.
Fidelity Bank says the deal – which is subject to regulatory approvals – will see the bank’s capital base grow to over Sh3.8 billion. This new capital injection will be made through The Duet East African Financial Holdings Ltd Fund, which is part of the Duet Group.
In a statement, the bank’s Executive Director, Sultan Khimji said the capital injection will allow the bank engage in larger transactions as wells as increase the customer base.
“Duet’s investment in the form of growth capital is very significant for Fidelity Bank in its transformation to a mid-tier bank. None of the Bank’s existing shareholders are exiting as we are all very confident about the bank’s future,” said Khimji.
The mid-tier retail bank is looking to expand beyond the 14 branches predominantly located in Nairobi and Mombasa to 28 branches spread across East Africa by 2018. The bank’s core capital dropped to Sh1.3B in 2014 from Sh1.5B in 2013 while profit before tax dropped slightly to Sh220M in 2014.
“This deal with Duet Group brings us closer to our stated objective of growing to a mid-tier category bank and listing on the Nairobi Stock Exchange (NSE) in the future,” added Khimji.
Duet Group Co-Founder and Chief Executive Officer, Henry Gabay said that Fidelity Bank gives Duet a perfect platform to invest in the Kenyan banking sector, which he described as innovative and competitive, though fragmented and ready for consolidation.
“We have been looking at Kenya for some time now and we see the Kenyan banking sector as an opportunity which will require growth capital as well as numerous consolidation opportunities in the sector. Fidelity Bank is a reputable, well-managed institution with an experienced team whom we are looking forward to working with. They have a robust financial technology platform and an aggressive expansion plan which we are looking to support both organically and by acquisition,” said Gabay.
The investment follows on from Duet’s private equity investments in Ethiopia, Ghana and the Ivory Coast in the FMCG sector. In addition to private equity investments, over the past five years, Duet Group has invested in excess of US$1.7 billion in emerging markets including sub-Saharan Africa.