I&M Holdings has disclosed transaction value of acquiring Giro Commercial Bank Limited (GCBL), a tier three bank at Sh5.09 billion.
The Sh5.09 billion represents about 11 percent of I&M Holdings’ market capitalisation using the acquisition price.
Compared to previous cash based acquisitions, I&M Holdings will pay by way of cash Sh2.55billion and issue of 21.04million shares at a price of Sh121.05.
This marks the first acquisition for I&M Holdings in Kenya.
Based on first quarter of 2016 numbers, I&M Holdings will acquire a loan book of Sh9.2billion which is about 7.2 percent of I&M’s loan book and deposits of Sh13.2billion about 9.9 percent of I&M’s deposit book.
GCBL had a gross Non Performing Loan ratio of 1.9 percent as at the first quarter of 2016 – much lower than the overall industry ratio of 8 percent.
I&M Holdings will also acquire seven additional branches raising its total count in the country to 42.
GCBL’s estimated annual profit before tax is about Sh500 million.
I&M Holdings expects to have cost savings of about Sh60 million annually.
Overall, GCBL will be held under I&M Bank Kenya- a key subsidiary of I&M Holdings.
An Extraordinary General Meeting will be held on June 27 2016.
According to Standard Investment Research Bank, the acquisition will have minimal strategy disruption given similarities of the two banks – both have conservative balance sheets and mainly target middle to high income customers as well as Small and Medium Enterprises (SMEs).
