Interesting counter this one.At some point I wonder what the bidders want as they watch the price go up.But then again it has a hint of manipulation.

Yes, I&M is a "mutation" of City Trust.

it is one and the same

Once upon a time, there was City Trust. It owned about 19% of I&M Bank.

Then the other shareholders of I&M Bank - holding the remaining 81% - decided to take over City Trust.

They surrendered their 81% shares in I&M Bank to City Trust and got City Trust shares in exchange.

As a result, I&M Bank became a wholly-owned subsidiary of City Trust and also the biggest investment of City trust.

Now these former shareholders of I&M Bank, really love that name "I&M". And since I&M Bank was City's largest potato, they decided to change the name of City Trust to I&M Holdings.

Of course, somewhere in the process, the total number of shares of City Trust increased dramatically so that the I&M Holdings is not the same thing as City Trust!

A similar thing is happening now: Individual shareholders of companies that were shareholders of I&M Bank - and are now holders in I&M Holdings - are surrendering their shares in these companies in exchange for I&M Holdings shares that the companies held. [Read that three times to understand it!!]

If it doesn't, consider this:

Biashara Securities Limited is one of the old shareholders of I&M Bank and, after the City Trust deal, Biashara ended up with 54,599,039 shares in I&M Holdings.

Now the shareholders of Biashara Securities Ltd have decided to divide the 54,599,039 I&MHL shares amongst themselves.

Biahara shareholders are:

Minard Holdings Limited -37.51%
Mnana Limited -18.63%
Kantilal Hirji Shah & Mrs. Vinumathi Kantilal Shah -4.17%
Mrs. Kantaben Amritlal Hirji Shah -4.17%
Eureka Holdings Limited -1.4%
Velji Khimji Maroo and Mrs. Jayaben Velji Khimji Maroo -0.36%
Shantilal Raishi Punja Shah -0.35%
Rajesh Dharamshi Shah -0.32%
Apul Narshi Shah -0.31%
Khimasia Foundation Registered Trustees- -0.30%
Others (978 other shareholders) -32.49%

Together, under Biashara Securities, the above people jointly own 54,599,039 shares in I&M Holdings. They have decided to divide them amongst themselves in accordance with the percentage holdings in Biashara.

E.g., Minard Holdings Limited will get 37.51% of the 54,599,039 shares in I&M Holdings, that is 20,480,100.

BTW: Biashara Securities was a company formed by the shareholders of Biashara Bank when it was taken over by I&M Bank. It was a vehicle for conducting the transaction.

Mid-sized banks will do better than the larger banks. The Tier 2 banks have;

1) a lower base so they can grow their deposits & loans faster than KCB or BBK on a % basis. Equity, as a big bank, seems to be the exception in this area.

2) expanded regionally where the market has lower hanging fruit and needs a flexible approach especially with SMEs. This has been explored in other posts and I believe DTB, NIC and I&M will benefit immensely. Even then, Kenya as a growth market for profits will remain significant for the next 2-4 years.

3) it easier than big big banks to roll out new products and branches without encountering bureaucracy. This is a temporary until they become big too. Equity used this flexibility with great results vaulting from small to medium to big.

4) clients with specific, not cookie-cutter, needs and who need quick and flexible decisions which are afforded by mid-size banks.

I expect the 115 price for I&M (or 180 for DTB and 60 for NIC) justified vs most larger banks. I expect I&M's 2013 EPS to be 13 therefore it is trading at an undemanding estimated 9 PER.