Commercial Bank of Africa, under the auspices of the Kenyatta Family Business, has made a cash offer of Ksh 1.4 billion (USD 137,617,90) to acquire Jamii Bora Bank, expanding the conglomerate which has strides in banking, dairy, real estate, hospitality, and manufacturing.
This bid for acquisition comes just weeks after CBA announced a reverse takeover of NIC Group, which is listed on the Nairobi Securities Exchange. CBA, NIC and Jamii Bora combined will rank as Kenyatta’s third-largest banking entity after KCB and Equity, cumulatively having assets worth Ksh 457 billion (USD 4,492,241,450). KCB and Equity are evaluated at Ksh 684 billion (USD 6,723,617,400) and Ksh 560 billion (USD 5,504,716,000), respectively.
At the said amount, the buyout offer can be regarded to be a steep discount of almost 60 percent to Jamii Bora’s March-published book value which revealed Ksh 3.4 billion evaluation. The lender is yet to release its half-year and third-quarter financials, having received an exemption from the Central Bank of Kenya (CBK) to facilitate the nearly completed buyout.
Conversant sources with the CBA, a majority-owned by the Kenyatta Family, say that it will privately hold Jamii Bora while owning a stake in the merged operations of CBA and NIC whose shared will appear on NSE list. Then, M-Shwari – CBA’s microcredit business – will be spun off to Jami Bora while CBA/NIC drives their mainstay corporate and SME banking.
Chief Executive, Jamii Bora, Sam Kimani has publicly resigned from the lender and is being succeeded by his deputy, Tim Kabiru, in an acting capacity. The lender’s liquidity ratio stood at a negative 11.1 percent as of March 2018, far short of the minimum statutory requirement of 20 percent, meaning that its short-term obligations meeting capacity is limited substantially. Coffer-full CBA’s entry is expected to change Jamii Bora’s fortunes and put the lender back on credible track.
Jami Borra calculated its net losses to Ksh 51.2 million (USD 503,288) in Q1 2018 compared to Ksh 96.2 million (USD 945,631) a year earlier as income interest plunged 36 percent to Ksh 264.9 million (USD 2,603,927). The bank’s loan book saw a 15.3 percent decline to Ksh 7.9 billion (USD 77,655,815).
March last year, the Kenyatta Family, led by Uhuru Kenyatta, purchased Rwanda’s Crane Bank for an amount reported to be Ksh 969 million (USD 9,525,124) to mark its first entry into the country. Crane Bank is a spinoff of the fallen Uganda Crane Bank.