Atlas Mara Limited, a sub-Saharan African financial services group announced at the end of April that they had entered into a binding term sheet with Equity Group Holdings Plc for the exchange of certain banking assets of the company, according Bloomberg press release published on 30th April 2019. Their assets in Zambia were among the four that would be traded in exchange for ordinary shares in the Equity group.
Atlas Mara acquired the ABC Bank assets in Zambia along with Finance Bank to set up one of the top 4 largest banks in Zambia by geographical reach. Although not listed, ABC has listed notes that are of concern to the Lusaka Securities and Exchange hence the publication of the signing of the Term Sheet as per LuSE requirements.
“In accordance with the listing requirements, as set out by the Lusaka Securities Exchange Plc (“LuSE”) and the Securities Act No. 41 of 2016 and with reference to the cautionary announcement issued by Equity Group Holdings(“EGH”) Plc authorized by the Capital Market Authority (“CAM”) of Kenya on 30th April 2019. The Board of Directors of African Banking Corporation Zambia Limited(“the Board”) wishes to inform holders of the listed notes, as well as other market participants that Atlas Mara Limited (“the Group”) has agreed to enter into a binding term sheet with EGH Plc for a share swap to exchange certain banking assets which include African Banking Corporation Zambia Limited”, read a statement issued on SENS by Atlas Mara Banking Corporation Zambia on 3rd May 2019.
A listed note a debt security issued by financial institutions whose return is based on equity indexes, a single equity, a basket of equities, interest rates, commodities or foreign currencies.
According to this first cautionary announcement Atlas Mara Limited intends to sell part of its pie in Zambia and 3 other African countries namely Rwanda, Mozambique and Tanzania in a swap for 6.27% stake in a Nairobi based commercial bank Equity Group Holdings (“EGH”). This significant strategic move is designed at bring first-class digital banking to Atlas Mara Limited in order to capitalize on the growing digital platform in the Zambian market.
This strategic move is in line with the continued promotion of the Digital Financial Services (DFS) industry in Zambia by the UNCDF in collaboration with the Bank of Zambia. Subject to regulatory approval the partnership transactions are expected to occur between the fourth quarter of 2019 and the first quarter of 2020 depending on the authority in the targeted countries. Importantly, Equity Bank is the most innovative bank that has delivered strong customer services and inclusion through advanced app technology in East Africa. This partnership will definitely provide Atlas Mara Zambia with a number of benefits which include;
- An opportunity to Further Consolidate their good works with their shareholders.
- Equity Group Holding Plc being a Power House for Digital Banking and Innovation will firmly position Atlas Mara Zambia to bring innovative digital banking to the Zambian Market.
- Further expansion in other Financial Services such as insurance and brokerage in order to provide holistic financial services.
- A great opportunity to adopt technology and product innovation using the expertise from Equity’s Exclusive Business Model, which offers a tried and tested pathway for growth through innovation.
Moving forward, securities holders of Atlas Mara Zambia are advised to exercise caution and to seek professional advice from a licensed investment advisor when dealing in the company’s securities until a full announcement is made.
Equity Group Holdings and KCB Holdings Group of Kenya have been in fierce battles of dominance of the Kenyan banking space. This transaction comes at an optimum time for the Equity group as its expands it African footprint to stay ahead of the pack.