KCB Group acquires DRC-Based lender Trust Merchant Bank (TMB)

KCB Group Plc has entered into a definitive agreement with shareholders of TMB to acquire a majority stake in the Democratic Republic of Congo (DRC)-based lender, entering the DRC, the newest member of the East Africa Community (EAC).

The move follows Equity Bank which also acquired interests in the mine-rich country.

The transaction is expected to close by the end of the third quarter of 2022, subject to regulatory, shareholders and other approvals. This will see KCB acquire 85 percent of the shares in TMB while the existing shareholders will continue to hold the balance for a period of not less than two years after which, KCB will acquire their shares.

Andrew Wambari Kairu, KCB Group Chairman said this is part of their ongoing strategy to tap into opportunities for new growth while investing in and maximizing returns from the Group’s existing businesses. “It gives us strong headroom to accelerate our growth ambitions to deliver better value for our shareholders and to bolster the push for deeper financial inclusion and social and economic transformation in Africa and beyond. We are excited that we can now play a role in catalyzing DRC’s and indeed East Africa’s economic expansion agenda,” he said.

KCB will pay a cash consideration for the shares determined based on the net asset value of TMB at completion of the proposed transaction, and using a price to book multiple of 1.49.

TMB, a public company limited by shares, is one of DRC’s largest banks with US$1.5 billion in total assets. TMB has a strong offering in Retail, SME, Corporate and Digital banking channels. It has over 110 branches and numerous agency banking outlets spread across DRC.

This acquisition is aligned with the Group’s strategic focus of scaling its regional presence. Once completed, this acquisition will complement KCB Group’s regional footprint with an asset base of Ksh1.5 Trillion (USD 12.6 billion) and is expected to strengthen the Group’s Retail and Corporate banking franchises.

“We are very excited about the opportunities KCB offers in this transaction and we are proud to bring our unique DRC insights and experience to the KCB Group. We believe that by combining our local knowledge and standing with the size and expertise of KCB Group, we should be able to increase market share and shareholder value through unlocking our synergies and business opportunities,” said Robert Levy, TMB Chairman.

TMB will give KCB Group access to Africa’s second-largest country with a population of over 93 million people.

In the three months ending March 2022, KCB Group PLC profit after tax surged 54.6 percent to Ksh9.9 billion. This rise from Ksh6.4 billion in a similar period last year was boosted by growth in total income and reduction in loan loss provision.

Revenues increased by 26.0 percent to Ksh29.0 billion on account of an increase in interest income, increase in non-funded income from lending activities and service fees and a 21.1 percent rise in earning assets.

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