NAIROBI, Kenya, Jul 26 – I&M Holdings PLC has issued a cautionary statement to its shareholders on its intention to acquire 90 percent of the share capital of Orient Bank Limited Uganda.
Once completed, this will be the third bank acquisition in 2020, after the Central Bank of Kenya gave a go-ahead to Nigerian lender, Access Bank PLC to acquire a 100 percent stake in Transnational Bank PLC and the 90 percent acquisition of Jamii Bora Bank by Co-operative Bank.
The proposed transaction will be subject to approval from the Central Bank of Kenya, Central Bank of Uganda, the Capital Markets Authority and the company shareholders.
Analysts at Cytonn Investments estimate that the transaction will see I&M spend more than Sh2 billion in the acquisition of the Ugandan Bank.
Orient Bank recorded loses of Sh30.8 million in the 2019 Financial Year from profits of Sh162.2 million in the previous year.
According to the Investment firm, the 2019 performance was mainly driven by an increase in the Total Operating Expenses to Sh2.8 billion in FY’2019 from Sh2.4 million) in FY’2018, largely driven by a 172.6 percent increase in Loan Loss Provisions to Sh523.7 million in FY’2019, Sh192.1 million in FY’2018.
The Bank’s Total Operating Income also declined by 2 percent to Sh2.56 billion in FY’2019, from Sh2.61 billion in FY’2018.
“In our view, the acquisition will be in line with I&M’s expansion strategy and will also expand its operations in the Ugandan Market thus reducing its reliance on the Kenyan Market,” the analysts said.