Equity Group Holdings is targeting 100 million customers with regional expansion by 2024, a move that has seen it reach preliminary agreement to exchange ordinary shares in the Group for controlling equity stakes in four banks operating in Rwanda, Tanzania, Zambia and Mozambique.
In its cautionary announcement published this morning, Equity Group said that it had reached agreement with Atlas Mara Limited – a London-listed financial services group – to swap controlling equity stakes in four of Atlas Mara’s subsidiaries for ordinary shares in Equity Group. These stakes include a 62 per cent stake in Banque Populaire du Rwanda, and 100 per cent stakes in African Banking Corporation Tanzania Limited, African Banking Corporation Zambia Limited and African Banking Corporation Mozambique Limited.
As part of the proposed transaction, Equity Group will issue approximately 252 million new shares in EGH to Atlas Mara, which, as a result, will become a 6.27 per cent shareholder in Equity Group. The shares expected to be allotted are worth about sh10.7 billion.
The announcement also noted that it may be of mutual benefit for Atlas Mara to invest further cash resources in Equity Group at the same time or shortly after consummation, which would increase Atlas Mara’s shareholding in the Group. The companies intend to further explore this and set out the final agreed position in the definitive transaction agreements, subject to regulatory and shareholder approvals.
Equity Group will also look to buy more shares in Banque Populaire du Rwanda from the remaining shareholders and will make further announcements with respect to this aspect at the appropriate time.
After consummating the transaction, Equity Group will operate in eight countries, up from the six that it operates in today, by adding Zambia and Mozambique to its footprint. In Rwanda and Tanzania, Equity Group plans to merge the business operations of its existing subsidiaries in those countries – Equity Bank Rwanda and Equity Bank Tanzania respectively – with those of the new subsidiaries it acquires in the swap with Atlas Mara, after consummation of the transaction.
Equity’s ambition is targeting expanding to nine countries with a combined population of 810 million by then, said Dr. James Mwangi, Managing Director & CEO Equity Group Holdings Plc. The transaction, when it completes fully, could also result in up to a 21 per cent increase in Equity Group’s total assets.
“We are very pleased to announce this agreement with Equity Group. The Proposed Transaction is consistent with our previously announced strategic review, and our stated intention to focus on investments in core markets where a path to market leadership is clearly achievable, and to partner elsewhere”, said Michael Wilkerson, Atlas Mara Executive Chairman.