Kedari acquires majority shares in First Atlantic

EM Capital Partners Ltd. (EM), an Accra-based investment-banking firm, has successfully structured and executed a deal that will see Kedari Nominees Ltd. of Nigeria become the new majority shareholder of First Atlantic Merchant Bank Ltd. (FAMBL).

This was after the Nigerian group and the former majority shareholder of FAMBL, Social Security and National Insurance Trust (SSNIT), closed an EM-brokered transaction for the acquisition of SSNIT's 63.2% stake in the bank.

As part of the overall transaction, Kedari Nominees Ltd. is also completing an additional investment of US$13million in FAMBL through a private placement organised by EM, which will see Kedari owning approximately 76% of the bank.

Kedari has made full payment for the shares purchased from SSNIT and has received Bank of Ghana approval after passing the Central Bank's rigorous due diligence process.

Providing the background of the transaction to B&FT, the Chief Executive Officer of EM, Mr. Mike Ashong,intimated that in 2008 the Bank of Ghana (BoG) issued a notice requiring banks to raise their minimum capital to GH¢60million.

Under the directive, banks with majority local ownership were to raise their stated capital to GH¢25million by 2010 and GH¢60million by 2012, while banks with majority foreign ownership were expected to achieve GH¢60million by the end of December 2009.

This directive was aimed at enabling banks to undertake syndications and also increase the depth of financial services in Ghana, in a way that will firmly position the industry to take advantage of the huge opportunities expected with the recent oil discovery, and also to meet some basic Basel II requirements.

According to Mr. Ashong, “In line with this directive, FAMBL sought to raise a total of US$50million in equity from both local and foreign investors through a private placement to enable it to build the capacity necessary to take advantage of the expected growth opportunities that an oil exporting economy (Ghana) will offer in the future.

“Consequently, FAMBL appointed EM Capital Partners Ltd. in October 2010 as transaction advisor and lead manager to assist the bank in raising the required capital. A total of US$12million was raised earlier this year through this private placement for the bank,” he said.

He added: “We have known and worked through the various stages and processes with the two parties (Kedari and FAMBL) for some time now, and we firmly believe that the partnership that is being created will lead to FAMBL becoming a finance powerhouse offering a wide range of banking services and products, which can only be for the greater benefit of the growing Ghanaian economy.”

Kedari has deep expertise in financial services and is looking to bring this knowledge to bear in Ghana through FAMBL.

The CEO also lauded the professional manner in which SSNIT handled the transaction and praised the catalyst role that the entity continues to play in the burgeoning Ghanaian economy.

SSNIT, since its establishment, has held a dominant position within the financial sector. Besides being the biggest provider of Pensions, it has significant shareholding in eight of the 27 commercial banks --- including majority shares in some of them.

But the Central Bank has expressed worry about SSNIT's lack of an exit-strategy for its interests in the banking sector, and said the pensions-manager does not have the required expertise to manage the banks in which it holds majority shares.

SSNIT's sell-off is therefore part of steps being taken by its board to limit the pensions-manager's involvement in the banking system.

The transaction advisor, EM, is a specialised investment-banking firm providing financial advisory and debt, equity and mezzanine capital raising services to multinational companies, local corporates and governments.

The firm also provides funds and investment management services to individuals and institutional clients. It was set up by investment-banking professionals with considerable experience in deal structuring and execution across West, Central and East Africa.