Kenya’s I&M to buy 90% stake in Uganda’s Orient bank

By Samuel Muhimba

Kenyan financial services firm I&M Holdings Ltd, owners of I&M Bank, Kenya’s 8th largest bank by assets (US$2.52 as at Sep.2019) will pay $33.6 million to acquire a 90 percent stake in Uganda’s Orient Bank according to disclosures in a circular to shareholders.

The deal will see the Kenyan Securities Exchange-listed group grow its regional banking operations already existing in Kenya, Rwanda, Tanzania and Mauritius.

“The combined group will be better able to serve the needs of regional and global customers, and in turn promote regional trade flows,” I&M said of the Orient Bank buyout.

Accordingly, the shares will be bought from Hemlata Karia, Jay Karia, Morka Holdings Limited, Zhong Shuang Quan, Cornerstone M8 Limited and the bank’s founder Ketan Morjaria who also owns 9.8 percent stake in Kenya’s Credit Bank will only retain a 5.5 percent in what will become I&M’s subsidiary. Alemayehu Fisseha will also retain a 4.5 percent interest in the bank.

The bank also said in the circular that I&M is required to effect payment of the purchase consideration for Orient’s shares by way of an amount in $33.6 million (subject to further adjustments).

I&M joins other Kenyan financial firms like KCB Group, Equity Group, and DTB Group who have already established banking subsidiaries in Uganda.

In Financial Year(FY) 2019, Orient Bank was among the loss making banks in Uganda recording losses of Ushs 1.1 billion from profits of Ushs 5.6 billion in FY’2018, while its book value stood at Ushs 114.1 billion in FY’2019.

The 2019 performance was mainly driven by an increase in the Total Operating Expenses to Ushs 97.2 bn in FY’2019 from Ushs 81.6 bn in FY’2018, largely driven by a 172.6% increase in Loan Loss Provisions to Ushs 17.9 bn in FY’2019, from Ushs 6.6 bn in FY’2018.