Equity Group has canceled the proposed Ksh.10B acquisition of Atlas Mara banking businesses in Mozambique, Zambia, Tanzania, and Rwanda.
In a notice issued by the bank on Tuesday, the bank said it mutually agreed to end the ongoing discussion citing shocks brought by the Covid-19 pandemic.
“By way of update, Equity Group Holdings has continued to engage with Atlas Mara (ATMA) regarding the Proposed Transaction or a variant of it. The board of directors has however considered the events that have taken place since the date of the above public announcement and particularly the effects of the COVID-19 pandemic to both the world and the economies in which the Group entities operate,” the bank noted.
According to the lender, the move is part of its decision to refine strategy given the COVID-19 pandemic in a move that saw the bank also suspend its annual Ksh.9.5billion shareholder pay-out.
“At the same time management will continue to place focus on accelerating the push to digital channels and growing the Equity Group’s various non-funded income franchises while re-evaluating the acquisition of new businesses where significant capital injection and managerial attention is required,” the bank added.
The pandemic has affected the country’s second-largest lender by asset base as it recorded a 14.5 percent dip its earnings in the first quarter of 2020 to Ksh 5.3billion from the higher loan-loss provision.
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In case the lender would have completed the deal, Equity Group would have acquired 62 percent of the share capital of Rwanda’s Populaire du Rwanda and 100 percent of African Banking Corporation Zambia, Mozambique, and Tanzania through a share swap transaction.
Equity has not made an update to its proposed purchase of a controlling stake in the Commercial Bank Congo, a transaction that was first announced back in September 2019.
The withdrawal from deal put bakes to Equity’s plan of growing into a pan-African outfit and further reduces the pace of growth in assets that were moving towards the Ksh.1 trillion.
