UGANDA – I&M Group has spent US$37.2 million to acquire a 90 percent stake in Uganda’s Orient Bank Limited, with the cost rising from the initial estimate of US$32.7 million, reports The East African newspaper.
The Nairobi Securities Exchange-listed lender says this is after the base price was adjusted to take into account multiple factors.
These include an appreciation of the Ugandan shilling against the US dollar, integration support, the short-term financial performance of the subsidiary and the sale of its property.
“The cost as of the half-year is US$37.2 million. The transaction is still ongoing and the final figure will be known by the end of the year 2021,” said Gauri Gupta who leads I&M’s corporate advisory business.
The Kenyan banking multinational signed an agreement with the sellers to make price adjustments on account of exchange rates between the date of signing the deal and its completion.
I&M also agreed to meet the cost of post-completion integration support and to factor in Orient Bank’s net loss or net profit for the period from January 1, 2021, until completion.
The sale of the subsidiary’s property in Kampala, Orient Plaza, also weighs in on the transaction price.
“The cost as of the half year is US$37.2 million. The transaction is still ongoing and the final figure will be known by the end of the year 2021”
I&M made a net profit of US$2.5 million in Uganda in the half-year ended June, up from US$12, 723 the year before, reflecting the impact of the Orient Bank acquisition.
I&M was running a corporate finance advisory business, I&M Burbidge Capital, in Uganda and the acquisition of the bank has expanded its operations in that market.
The banking group’s overall net earnings grew by a third to US$38.1 million from US$28.1 million, helped by higher interest income.
I&M said the deal has given it access to additional loans worth US$70 million, deposits of US$165.4 million, 70,000 customers, 14 branches and 22 ATMs.
The company bought shares from Orient Bank’s shareholders Hemlata Karia, Jay Karia, Morka Holdings Limited, Zhong Shuang Quan, Cornerstone M8 Limited and the bank’s founder Ketan Morjaria.
Dr. Morjaria, who held a 7.91 percent stake before the transaction, sold part of his shares and retains a 5.5 percent equity in the subsidiary.
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