Equity Group Abandons Plan to Acquire Banks from ATMA Limited

Equity Group (EGH) on Tuesday, June 23, 2020, ended plans to acquire Atlas Mara Limited (ATMA) owing to the uncertainty of risk posed by the COVID-19 pandemic.

James Mwangi, the Equity’s Chief Executive Officer in a statement said that the two firms have mutually agreed to discontinue discussions that would have seen the Kenyan lender taking over some of Atlas Mara’s units in Rwanda, Zambia, Tanzania and Mozambique.

“After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the proposed transactions, or a variant of it, for the foreseeable future,” read the statement.

Atlas Mara was to be paid in the form of Equity shares amounting to a 6.72 percent stake with a current market value of Ksh13.6 billion ($136 million). However, in January, they said no binding agreement had been signed for undisclosed reasons.

However, Mwangi said that Equity post COVID-19 primary focus is conserving cash and liquidity, and deploying it to support its customers to survive during the ongoing economic crisis and to recover and thrive post the crisis.

In May 2019, Equity Group announced its intention to acquire certain banking assets of Atlas Mara (ATMA): 62.0 percent shareholding in BPR Rwanda, and 100.0 percent shareholding in ABC Zambia, ABC Tanzania, and ABC Mozambique.

In Rwanda, Equity would have acquired 62 percent of the share capital of Rwanda’s Banque Populaire du Rwanda, and a hundred percent of African Banking Corporation Zambia, African Banking Corporation Tanzania and African Banking Corporation Mozambique.

On the other hand, Atlas Mara was expected to gain shares equivalent to a 6.72 percent stake in Equity Bank valued at Sh10.9 billion.

“The reasons for this decision include the need to refine EGH’s strategy given the COVID-19 pandemic. This refinement entails conserving cash and liquidity including the non-declaration of dividends for the financial year ended 31 December 2019 and deploying it to support customers in existing businesses.”Mwangi said.

The Equity’s CEO stated that the management will continue to place focus on accelerating the push to digital channels and growing the Group’s various non-funded income franchise while re-evaluating the acquisition of new businesses where significant capital and managerial attention is required.

“The Group is committed to its strategic objective of expanding its footprint in Africa to provide access to competitive, tailored financial services to improve people’s lives and livelihoods whilst also delivering significant value to its stakeholders. At the same time, the Group continues with its vision of building sub-Saharan Africa’s premier financial institution through delivering innovative products and services to customers including, in particular, the effective use of technology self-service banking.”Dr. Mwangi concluded.