NAIROBI, April 18 Kenya's fast-growing Equity Bank (EQTY.NR) said it plans to acquire Uganda Microfinance in an all-share deal worth 1.66 billion shillings ($26.9 million).
Uganda Microfinance, a leading micro-financier in the east African country, will get 11.3 million new shares in Equity Bank valued at 147 shillings each. Microfinance is the supply of small loans and other financial services to poor borrowers in the developing world.
"The bank envisages that the current microfinance business in Uganda is poised for exponential growth and the plan is to extend Uganda Microfinance's offering into a full scale commercial bank," the bank said a statement late on Thursday.
The deal is pending regulatory approvals in the two east African countries and from Equity's shareholders.
Equity Bank's shares rose on Thursday by 3 shillings to 190 shillings.
The bank more than doubled pretax profit to 2.4 billion in 2007 and received a capital injection of 11 billion shillings by foreign investment group Helios EB Investors in exchange for a 25 percent stake.
"The massive injection of capital by Helios EB gives the bank (an) adequate war chest to consolidate its current growth, diversify into new offerings and embark on a regional foray with an eye to the pan-African market," the bank said.
Equity is Kenya's third-largest company by market value, with a market capitalisation of more than 69 billion shillings. It has a large customer base in low-income, rural areas. (Writing by Helen Nyambura-Mwaura; Editing by Quentin Webb)