UAE-based firms, Abcon International LLC, Parkview Investments Limited, and Medillon Trading FZE, in conjunction with local businesspersons, have successfully acquired a significant 38.91 per cent stake in Sidian Bank, thereby wresting majority control from Centum.
This substantial development in the financial sector signifies a pivotal shift in the composition of the bank's shareholders.
Pioneer General Insurance Limited, a firm registered in November 2015, played a pivotal role in the acquisition, holding a substantial 20 percent stake in Sidian Bank.
The list of shareholders for this newly formed entity also includes Pioneer Insurance Holdings Limited, with directors Catherine Wamuyu Wachira, Michael Kenga, Bridget Cherono, and Shirazali Abdulla.
Wizpro Enterprises Limited, which secured a 15 per cent stake in the bank, was registered in September 2017. This firm lists a single director and shareholder, Solomon Muriithi Maina. Similarly, Afram Limited acquired a 3.91 percent stake in Sidian, with James Maina Muthoni serving as the sole director and shareholder.
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The total value of this transaction is estimated at approximately Sh1.9 billion, based on Centum's carrying value of the lender as of March 31, 2023. The bank's carrying value at that time was recorded at Sh4.27 billion.
Centum Investment Group CEO, James Mworia, communicates the profound implications of this transition through a communique.
"Consequently, and in accordance with the regulations, Centum hereby notifies the public that Sidian will cease to be a subsidiary of Centum. The price for this transaction is in line with Centum's latest carrying value of Sidian in its books as at March 31, 2023," Mworia stated.
"The carrying value was at an uplift based on the market value of Sidian's shares. This transaction will therefore not have a material impact on the net asset value of Centum."
Previously holding an 83.43 percent stake in Sidian Bank through Bakki Holdco Limited, a holding company for the investment in Sidian Bank Limited, Centum's control of Sidian Bank will now be diluted to just 44.52 percent following the sale, leaving no majority shareholder.
Earlier, Centum had entered into an agreement to sell its stake in the bank, but the completion period lapsed before the parties could finalize the transaction's conditions and requirements.
Consequently, Centum decided to retain its stake in the bank before revealing the recent stake sale.
Centum's current strategy is to support the continued growth of Sidian Bank.
The bank's management aims to seize opportunities for profitable growth, especially following the removal of interest rate caps.
They plan to leverage digital channels to expand their customer base and sustain the growth of the non-funded income segment, as outlined in Centum's latest annual report.
Sidian Bank, which was previously part of Centum's private equity portfolio, posted a compounded annual growth rate of 14 per cent in the year ending March 2023.
During the initial half of this calendar year, Sidian Bank recorded a net profit of Sh209.8 million, reflecting a decrease from Sh251.4 million, primarily attributed to a decline in non-interest income and elevated operating expenses.
In the same period, Sidian's total assets held steady at Sh43.3 billion, with a notable loan book valued at Sh24.2 billion.
Moreover, the bank experienced an augmentation in its shareholder funds, rising from Sh5 billion as of June 2022 to Sh5.3 billion.
This financial institution maintained a robust capital position throughout June, boasting a core capital of Sh4.5 billion, significantly exceeding the stipulated minimum statutory capital requirement of Sh1 billion.
Additionally, Sidian Bank achieved a commendable liquidity ratio of 50.1 percent, well above the mandated minimum of 20 percent.
Originally known as K-Rep Bank, Sidian Bank is a full-service commercial bank providing a variety of financial services to individuals and enterprises.
Its roots trace back to K-Rep Group, founded in 1984 as a project to support the development of small and micro-enterprises.
Centum Investment Company Limited embarked on a significant endeavor in November 2014, acquiring a substantial majority shareholding in K-Rep.
This pivotal move laid the foundation for the subsequent transformation of the bank, culminating in its rebranding as Sidian Bank in 2016.
Sidian Bank, at present, boasts a network of 43 branches spanning the entire nation, with a notable concentration of these branches located within the vibrant Nairobi region.
The bank's ownership structure includes a 16.57 percent stake held by individual shareholders, with additional holdings by K-Rep Group Limited and KWA Multi-Purpose Co-operative Limited, comprising 11.4 percent and 3.26 percent of the bank's equity, respectively.
As of December 31, 2022, Sidian Bank had a total of 4.3 million outstanding shares, collectively valued at Sh2.1 billion, a testament to its prominent position within the dynamic landscape of the Kenyan banking sector.
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