EQUITY GROUP AND ATLAS MARA DISCOUNTINUE PROPOSED ACQUISITION OF BANKING BUSINESSES IN FOUR COUNTRIES

The Board of Directors of Equity Group Holdings Plc (EGH) has mutually agreed with Atlas Mara (ATMA) to discontinue discussions on a proposed transaction.  EGH had expressed the intention to acquire banking businesses from ATMA in Rwanda, Tanzania, Zambia and Mozambique. This decision is consistent with the board’s view of uncertainty of risk which precipitated the proposed withdrawal of Kshs 9.5 billion dividend pay-out to shareholders.

In January 2020, the board announced the extension of discussions with ATMA following the expiry of the transaction period before the two parties could sign a detailed transaction agreement. During the extended period, the two parties would continue further discussions to try and reach mutually acceptable commercial terms with respect to the proposed transaction or a variant of it.

Speaking while announcing the board’s decision, Dr. James Mwangi, Managing Director and Chief Executive Officer of EGH Plc said: “The board has considered the events that have taken place since January when the two parties agreed to extend transaction discussions and particularly the impact of the Covid-19 pandemic to the world and the economies in which EGH operates. After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the transaction for the foreseeable future.” The  board’s decision is in line with its business continuity management  that speaks to risk assessment, approach to prudent risk mitigation and management in the prevailing economic slowdown occasioned by the Covid-19 pandemic in the region and globally.

Dr. Mwangi added: The board’s business continuity management is focused on conserving cash and liquidity and deploying it to support our customers to survive during this economic crisis and to recover and thrive after the crisis. A strong capital and liquidity position gives us the strength and capacity to cushion our business, accommodate and walk with our customers during these challenging times. We have deployed a defensive and offensive mechanism through loan accommodations and rescheduling/restructuring of up to twenty five percent of the total loan book for periods of up to thirty six months. This will enable our customers to go through the prevailing turbulence, while at the same time preserving cash to shore up the financial revival and growth of their businesses beyond the Covid-19 crisis.”

On the offensive approach EGH is focused on accelerating the push to digital channels and growing the various non-funded income franchises while re-evaluating the acquisition of new businesses where significant capital injection and managerial attention is required.