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LOLC to acquire Kenyan Microfinance Bank

09 Feb 2022

  • 73.2% stake to be acquired for Ksh 237 m
LOLC Holdings PLC, Sri Lanka’s second-largest publicly traded company by revenue, has received regulatory approval to acquire a 73.2% stake in Key Microfinance Bank PLC. The lender, which formerly traded as “Remu”, is selling shares to the multinational at a cost of Kenyan shillings (Ksh) 237 million. Finance Cabinet Secretary Ukur Yatani, last week gazetted the multinational’s exemption from sections of the Microfinance Act that places a 25% ownership limit in microlenders. “The Cabinet Secretary for the National Treasury...exempts LOLC Mauritius Holdings Limited from provisions of section 19 (1) of the Act for a period of four years,” Yatani said in the notice dated 3 February. LOLC Mauritius is a subsidiary of the Sri Lankan firm. The exemption is effective from 1 January, and runs until 31 December 2025, after which the multinational will need to reduce its stake or seek an extension of the exemption. Documents sent to shareholders for approval show that the firm is targeting a 73.29% stake in the microlender in what will make it the anchor owner while cutting Fusion Capital’s stake to 6.1%. LOLC is buying 31.4 million shares at a price of Ksh 7.54 each, valuing the transaction at Ksh 237.4 million. The multinational is expected to help Key Microfinance revamp its core banking system to improve efficiency to compete in a tight micro-lending environment. It will also help link Key Microfinance to global capital through multilateral funding partners ranging from development funding institutions to commercial banks at favourable terms. Investor interest in Kenya’s financial market has increased over the recent past on the resilience of the lenders that have survived the coronavirus pandemic despite challenges of bad loans. Microfinance institutions mainly lend to individuals and small and medium-sized businesses. The Sri Lankan financial service firm has been mulling expanding operations into Kenya as it seeks to tap the rising demand for microcredit. (Business Daily Africa)


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