Access Bank in fresh $37m Kenya acquisition deal

Access Bank Holdings Plc has announced that its banking subsidiary has entered into an agreement with Centum Investment Company Plc for the acquisition of its 83.4 per cent equity stake holding in Sidian Bank Limited in Kenya.

A statement signed by the company’s secretary, Sunday Ekwochi, said the deal is approximately $37 million (N15 billion), a 1.1x multiple of price to book value based on shareholders’ equity as of March 31, 2022.

The deal is a continuation of the bank’s inorganic growth trajectory. The transaction, which is subject to regulatory approvals by Kenyan and Nigerian regulatory authorities, would be the second Kenyan acquisition of the lender in two years. If it secures regulatory consent, it will also be the sixth in the past five years.

It had earlier acquired Transnational Bank Plc of Kenya in 2020 as a strategic entry into the highly-competitive Kenyan financial ecosystem.

In 2018, it acquired the defunct Diamond Bank Plc, a process completed in 2019. In the same year, it completed the previous Kenyan deal, the bank announced the acquisition of Cavmont Bank Limited through a merger deal and completed the process last year.

It has also completed the acquisition of Grobank of South Africa with the bank renamed last year. In the same year, Access Bank completed the acquisition of about 78.15 per cent holding in African Banking Corporation of Botswana Limited.

The latest target will be merged with Access Bank Kenya, which the bank believes will position it as a major player in the industry.

The Group Chief Executive, Herbert Wigwe, said the growth transaction being implemented in Kenya represents a relentless focus and execution of the bank’s strategic objectives.

“The acquisition of Sidian is a significant step-up in scale and potential for Access Bank in Kenya, which represents the largest market and trade corridor in East Africa. The significant increase in scale and customer base presents us with enormous opportunities to support growth in the various ecosystems we are building in our trade and payment business. The economies of scale that derive therefrom will continue to drive and enhance contributions to all stakeholders,” he said.

Chief Executive Officer of the banking subsidiary, Roosevelt Ogbonna, said the proposed business combination would help the bank to play a stronger role in the growth of the East African country’s economy.

“This transaction builds on our earlier acquisition of the former transactional Bank Plc (now Access Bank Kenya) and underscores our resolve to strengthen our presence in Kenya, a key African market that fits into our strategic focus for geographic earnings growth and diversification.

The acquisition and intended subsequent merger will create a strong and competitive balance sheet for Access Bank in Kenya, positioning us to be well placed to promote regional trade finance and other cross-border banking services in the East African Community (EAC) and broader COMESA region,” he said.

Starting as a pro-poor NGO and later micro-credit lender, Sidian Bank has an interesting history in the Kenyan economy.

The bank, formerly known as K-rep Bank, has its origins within K-rep Group, an investment vehicle established in 1984 to support the development of small and micro enterprises (SMEs) through NGO-managed projects.

In 1987, the project was incorporated as a local NGO and it changed its strategy from supporting NGOs with grants and technical assistance to direct lending in 1989.

In 1999, K-rep Group established K-Rep Bank alongside other entities while its majority share was only acquired by Centum Investment Company in 2014 making it a subsidiary of the group. Two years later, it was rebranded as Sidian Bank.