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Private equity firm Actis is planning to sell its 80 per cent stake in Rwanda Commercial Bank (BCR) in the coming weeks, marking a fresh phase in the firm’s exit from regional investments as it looks to return cash to investors.
The firm is also expected to sell its stake in Umeme, Uganda’s electricity distributor, and DFCU, the Uganda Securities Exchange-listed bank, after an attempt to sell off the shareholding flopped in August. Details about the planned sale of the three firms remain scanty, although sources in Kigali, Nairobi and Kampala said Actis was looking at closing the deals by year’s end, triggering investor interest across the region.
Private equity firms basically invest for a period of up to 10 years, after which they “harvest” the investment and return money to their investors (limited partners).
Actis bought into BCR in 2004 for $6 million and as is typical with many private equity investments, the firm will exit having seen the fortunes of the commercial bank turned around.
The firm acquired a substantial stake in Umeme Ltd about three years ago following Eskom’s exit from the investment consortium that won a 25-year concession to manage Uganda’s power distribution network in 2003.
The UK-based private equity firm holds a 60 per cent stake in DFCU Ltd, while the rest of the shares that were listed on the Ugandan bourse almost seven years ago are held by both institutional and retail investors.
In the BCR deal, sources in Kigali said the minority shareholder — the government of Rwanda — had already approved the deal, with the decision now left to Actis and the potential buyer.
Actis’s CEO in charge of its East African operations Michael Turner however declined to comment on the matter, saying he would talk to this newspaper this week.
Rwanda’s central bank — the National Bank of Rwanda (BNR) — said it is yet to receive a formal bid from Actis.
“So far, they have not written to us, but whatever they decide, our job is to ensure that there is financial stability.” BNR Governor Claver Gatete told The EastAfrican last week.
Banking industry insiders who spoke to The EastAfrican say Kenya’s IM bank could be interested in buying a majority shareholding in BCR as it seeks to expand operations in the region.
However, IM bank’s general manager Suprio Sengupta said he was unable to give information on the matter.
BCR, Rwanda’s fourth largest bank by assets, returned to profitability in 2009 after overhauling its management structure and revamping its operations. BCR’s profits after tax increased to $4.8 million in 2010 from $2.6 million in 2009.
Last week, the bank announced its unaudited results, indicating that it had registered a net profit after tax of $3.9 million for the year ended September 2011.
“We had several things to do to fix up our loan book, high levels of cost, fix up the declining market,” BCR managing director Sanjeev Anand said, pointing out that the bank was now better positioned in the market.
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