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Kenya’s I&M completes majority acquisition of Orient Bank

What it means for clients and banking sector 

Kampala, Uganda | JULIUS BUSINGE | Kenya’s I&M Bank has completed the majority acquisition of Orient Bank Ltd from 8 miles LLP and Morka Holdings Limited, executives said on April.30.

The Kenyan lender follows the footsteps of DTB, KCB, Equity and NCBA banks that have already established a footprint in Uganda and the rest of the East African community states.

This transaction received approvals from relevant financial regulators – Central Bank of Kenya, Bank of Uganda, Capital Markets Authority of Kenya and the COMESA Competition Commission (CCC).

Orient Bank is the 12th largest commercial bank in terms of asset base in Uganda.

This development comes in as many months since I&M Holdings PLC and Orient Bank Limited signed an acquisition agreement in July 2020 with I&M Holdings PLC acquiring 90% stake in Orient Bank.

What is in for customers?

Through this acquisition, executives said, OBL customers will now benefit from this technologically driven infrastructure, which will give them a wide suite of market driven financial solutions, aimed at meeting their financial and lifestyle requirements.

The move underscores I&M Group’s commitment to its growth and expansion strategy in East Africa, where Uganda was the missing link in the Group’s strategic effort to set up its presence in all East African countries.

In addition, this acquisition provides Orient Bank customers an added convenience of accessing their bank accounts across the five countries where I&M has presence. This includes Kenya, Mauritius, Rwanda and Tanzania.

A key focus of this strategy, according to executives, is to seek opportunities to invest at a local and regional level enabling the Bank to serve the needs of all customers, while promoting trade flows within the region.

The Group is said to have already made noteworthy investments in its robust infrastructure as part of its digital transformation journey.

This development supports the Group’s business growth initiatives through diversification of revenue streams, by entry into new markets and extension of its corporate, business and personal banking, treasury and trade finance solutions, to all its customers operating in Uganda.

I&M’s Holding Executive Director, Sarit Raja Shah said “I&M Group aspires to be Eastern Africa’s leading financial partner for growth”.

The acquisition of OBL will place I&M Bank in a profitable position to capitalise on the growth in the Eastern African economies and thereby ultimately increasing shareholder value.

“This acquisition is expected to give the Group greater capacity to grow profitably, through extending our network to our regional customers,” Shah said.

I&M Holdings reported a 21% decline in net profit for 2020 from Ksh10.77bn in 2019 to Ksh8.41bn in 2020 attributed to COVID-19 crisis.

Ketan Morjaria, a founding member of OBL and continuing shareholder and director said this acquisition marks a great milestone in the history of Orient Bank.

“We are proud to be integrating into a regional group like I&M Holdings PLC, which synergies will allow our customers to benefit from more seamless and superior banking products whilst continuing a tradition of trust,” Morjaria said.

Pather Kumaran, the CEO of OBL said the acquisition of OBL by I&M Holdings PLC, will see the new entity rise to greater heights and allow them to broaden their market reach and penetration.

“The management of OBL is excited to be part of a large and growing Group and look forward to serving both new and existing customers with better products and digital channels across the region,” he said.

Through the acquisition, I&M Group has acquired additional net loan assets value of approx.Shs262bn, deposits of Shs606bn, a customer base of 68787, a staff component of 340 employees and a network of 14 branches and 22 ATMs across the country.

A clear plan for the integration of OBL into the I&M Group has been developed and the Group expects to gain considerable business and operational synergies.

The acquisition of OBL adds to a list of previous strategic alliances that the I&M Group has effectively completed such as the acquisition of Giro Commercial Bank Limited in Kenya, I&M Burbidge Capital Limited in Kenya and Uganda, CF Union Bank in Tanzania, BCR Bank in Rwanda and First City Bank in Mauritius.

I&M strength

Listed on the Nairobi Securities Exchange with a market capitalization of KES 37.5 billion, I&M is regulated by the Capital Markets Authority as well as by the Central Bank of Kenya as a non-operating holding company.

I&M Holdings PLC (I&M Holdings), formerly known as City Trust Limited (CTL) was incorporated on August 16, 1950.

I&M conceits itself on its strong values and key strengths of innovative service and strong customer relationships.

On the other hand, Orient Bank opened shop in Uganda in 1993 and has built a strong heritage based on trust, reliability and provision of innovative services, according to its executives.

In November 2002, it successfully outcompeted other banks and acquired TransAfrica Bank Limited as part of its growth strategy. In 2015, the London-headquartered private equity fund 8 Miles acquired a 42% stake in Orient Bank. Since 2015, the Bank has placed a significant emphasis on investment into digitisation including internet banking, mobile banking, ATMs, Visa cards, POS terminals and an online payment gateway.

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