MICROCAPITAL STORY: Equity Bank, a Kenyan Microfinance Insitution, to Cross List on Uganda Securities Exchange after Recent Acquisition of Uganda Microfinance Ltd (UML)

Equity Bank, a leading provider of microfinance in Kenya, plans to cross-list on the Uganda Securities Exchange. This decision was spurred by the finalization of Equity Bank‘s acquisition of Uganda Microfinance Ltd (UML), which had been pending shareholder and regulator approval.

According to the Independent, UML CEO Charles Nalyaali believes that Equity Bank will be a power in the Ugandan financial system because the company’s customer base of approximately 2.5 million people exceeds the 2.4 million people who currently utilize banking services in all of Uganda. In order to take advantage of the recent 6.5 percent per year growth in the Ugandan economy, Equity Bank plans to invest USD 175m (denominated in local currency) as part of a plan to transition UML into a full-scale commercial bank.

In the final agreement, Equity will purchase UML for SHs 40.8, (USD 25m) and receive 83,000 customers and 28 branches inside of Uganda. In return, UML shareholders will receive 8 million shares, or 2.2 percent, of Equity bank. To learn more about this acquisition, please refer to this previous MicroCapital story. 

Equity bank, established in 1994, was capitalized at over USD 234m with totals assets of over USD 833m and a gross loan portfolio of USD 348m (in local currency) as of 12/31/2007. According to the MIX Market, Equity Bank had a debt to equity ratio of 255.81 percent and a return on equity of 19.34 percent, also measured at the end of 2007. It received an a- rating by MicroRate in June 2005, the most recent rating available.

UML, founded in 1997, had total assets slightly above USD 34m and a gross loan portfolio of USD 22.8m at the end of 2007. It had a debt to equity ratio of over 330 percent and a return on equity of 51.6 percent. It did not, however, report an external evaluation to MIX Market, the Microfinance Information eXchange.  

By Greg Casey, Research Assistant

Additional Resources: 

The Independent: “Kenya’s Equity Bank to cross list on USE,” by Patrick Kagenda.

Daily Monitor: “Equity Bank completes acquisition of UML,” by Walter Wafula. 

Microcapital.org article, April 21,2008: “Equity Bank of Kenya to acquire Microfinance Institution (MFI) Uganda Microfinance in $26.9m Deal.”

Equity Bank: home 

MIX Market: Equity Bank

MIX Market: UML 

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