- Equity Group will pay $48.1 million for 91.93% stake in Cogebanque and intends to make an offer for the entire ownership.
- Cogebanque is a public Ltd company licensed by the central bank of Rwanda and ranks as the fifth largest lender.
- Upon Equity Bank’s amalgamation with Cogebanque, it will become the second largest bank in Rwanda.
Kenya-based regional lender Equity Group is acquiring Compagnie Générale de Banque (Cogebanque) PLC Ltd in Rwanda. The agreement, represented by a binding term sheet, will see Equity Group pay a total cash consideration of $48.1 million to obtain a controlling equity stake of 91.93 percent.
Upon completion of the transaction, Equity Bank’s amalgamation with Cogebanque would position it as the second largest bank in Rwanda. The entity will have a combined assets market share of 18 per cent and a deposits market share of 19 per cent, based on audited accounts as of December 31, 2022.
This acquisition solidifies Equity Group’s significant presence in the region, with the amalgamated Rwanda subsidiary joining Equity Bank Kenya and EquityBCDC in the Democratic Republic of Congo as banks holding the second largest market share in their respective markets.
Equity Group’s investment decisions are guided by its impressive growth history and optimistic outlook. Dr James Mwangi, Group Managing Director and CEO of Equity Group Holdings Plc highlighted Rwanda’s strong economic performance, with an average GDP growth rate of 6.5 per cent over the past five years, ranking it among the top 10 fastest-growing countries globally.
Favourable business environment in Rwanda
He also emphasized the favourable business environment in Rwanda. For instance, the expected recovery of global travel benefiting tourism and MICE (meetings, incentives, conferences, and exhibitions) strategies, regional integration efforts, support for trade, and increased contribution to the manufacturing sector.
Additionally, Dr Mwangi pointed out the underpenetrated nature of Rwanda’s financial services sector, with private sector credit and GDP below 30 percent, presenting a clear growth opportunity for the Equity Group.
“Equity Group’s acquisition of Cogebanque reflects the trust and confidence placed in Rwanda’s economic prospects and the resilience of our financial industry. The consolidation of these two institutions will undoubtedly contribute to the growth and stability of Rwanda’s banking sector, enabling us to provide better financial services to our citizens and facilitate economic empowerment,” said Dr Uzziel Ndagijimana, Rwanda’s Minister of Finance and Economic Planning.
Equity Rwanda’s economies of scale
Rwanda has been Equity Group’s highest-return business, generating significant growth and maintaining operational efficiency. The acquisition and amalgamation of Cogebanque will contribute to the consolidation and transformation of Equity Rwanda’s economies of scale, resulting in a remarkable 54 percent growth in its balance sheet.
This strategic move positions Equity Rwanda to play a more significant role in both the local economy and the region, aligning with Equity Group’s Africa Recovery and Resilience Plan (ARRP).
The expanded balance sheet, coupled with an enhanced single lending obligor limit, will better cater to the financing needs of businesses in high-growth sectors.
It will also strengthen the bank’s capacity for syndicated lending partnerships with other major banks in Rwanda, thereby supporting the country’s economic growth as envisioned in Vision 2050. Furthermore, it will facilitate growth in key sectors such as Tourism, MICE, and manufacturing.
Acquisition to benefit Rwanda’s MSME
By combining Cogebanque’s existing network of 28 branches with Equity Rwanda’s operations, the merged bank will achieve wide distribution and coverage throughout the country. Simultaneously, it will enhance and reinforce its Micro-, Small-, and Medium-sized Enterprise (MSME) franchise, which serves as a core strength for Equity.
The MSME segment of Rwanda’s economy will greatly benefit from Equity’s robust product offerings and innovative technology solutions tailored specifically for this segment.
“This acquisition and the planned amalgamation of Cogebanque with Equity Bank Rwanda will contribute to the establishment of a robust national and regional commercial bank, aligning with and supporting Rwanda’s aspirations of becoming an international financial and business centre. The presence of strong local, national, and regional commercial banks will serve as the foundation for achieving the status of a regional and international financial services centre,” said Dr Mwangi.