Rank: Chief Joined: 1/3/2007 Posts: 18,346 Location: Nairobi
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Ericsson wrote:VituVingiSana wrote:kmucheke wrote:VituVingiSana wrote:kmucheke wrote:Ericsson wrote:I&M bank making an acquisition in Uganda.
They are acquiring 90% of the issued share capital of Orient Bank Limited,Uganda Quote:Orient bank launched its services in Uganda in 1993.The bank then acquired Trans-Africa Bank Limited in 2002, which had been declared insolvent by Bank of Uganda.
Through its history, the bank has gone through several ownerships by different entities and individuals. The last acquisition was by the London-headquartered private equity fund 8 Miles, founded by musician Bob Geldof, who acquired a 42 per cent stake in Orient Bank (U) Ltd in 2015. The founders of the bank, led by Ketan Morjaria, hold 49 per cent in the bank.
The remaining shareholding is by individuals Alemayehu Fisseha, the owner of Prime General Supplies, and the Ugandan-based Chinese manufacturer and property developer, Zhong Shuang Quan – each with 4.5 per cent.
In 2019, the bank struggled to make money, turning in a loss of Shs 1 billion from a Shs 5.6 billion profit registered in 2018. Its assets grew to Shs 814 billion in 2019 from Shs 749 billion in 2018, according to the official published financial results.
LINK The bank seems to operating around 15 branches but some are being merged due to covid. Let's wait and see how many branches I&M will have if the deal goes through and whether they can make profits. Seems I&M will have to put some cash into it as well so the total investment will be higher than just the purchase price. An article in The East African states the deal is estimated at $23.4M (Ksh2.34B). Not a huge stretch for I&M given its profitability even during COVID. 1H 2020 PAT 3.2bn. Assuming this acquisition has been in the works for at least 1 year, the cash may already have been earmarked. They will reduce dividend payout to raise the cash. Not true. CBK must approve such a deal and would expect I&M to have the cash ready TODAY versus a vague "will reduce dividend payout to raise the cash". As is, I&M had a low dividend payout ratio (20-25%) but given CBK's reluctance on banks paying dividends for FY2020, I have taken a zero/low dividend into account. High dividend payout listed banks were KCB, SCBK and ABSA. Stanbic wasn't too bad. Perhaps others too. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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