Monday, November 12, 2007

CFC-Stanbic Bank EGM: merger approved

An extraordinary general meeting to approve the CFC – Stanbic merger was held on November 12 at the Intercontinental Hotel

Deal: Stanbic is the largest bank in Africa with a presence in 18 Africa countries and 21 others around the world (including Bank of America in Argentina which they just bought). It has asset of $140 billion and 43,000 employees – and by combining their (relatively) small Kenyan operation with CFC, they will become the 4th largest bank in Kenya.

Approval got: CMA, CBK, monopolies commission
Approval to be got: shareholders, SA reserve bank, NSE
Deal should be complete in about a month

The meeting was led by CFC Chairman Charles Njonjo. Fellow director J. Kierini introduced the board and, other dignitaries present who including D. Ndonye (Deloitte), Jimnah Mbaru, Kaplan & Stratton advisers, and Craig Bond and a team from Stanbic include his son who works at Stanbic Kenya.

CFC MD Soundararajan explained rationale for the merger - synergies, very similar and complementary customers, regional opportunities, and enhanced capital adequacy. Customers will get a one stop shop for all their business, staff get to work in a bigger bank with more careers opportunities (and all employees are assured of retaining their jobs).

Shareholder questions
Dilution of minority shareholding? : Management said they are getting into a bigger entity
Are major shareholders bailing? : Gambit will get paid in new shares but also about 5.8 billion shillings. MD answered that shareholders are staying and the company is not going anywhere
Mgmt. afraid to say that CFC being ; Management says it’s a merger, as it is not a sale, new entity will have 40% CFC and 60% Stanbic shareholders
if CFC is growing well, why sell? Need for capital is important. MD said that he needs about $100 million, while new entity will have around $60 – 70 million. Merger will enhance the company’s growth plans
Due diligence on Stanbic? ; Done and they shared strategies which each other to see if they were on the same path. Also board member (and lawyer) Fred Ojiambo denied that a 25 billion shilling lawsuit had eroded the value of Stanbic (K) saying that claim had no firm base
Why no bonus shares instead of selling out?: MD said CFC had in the past given the largest bonus divided in the history of NSE 21 for 1 and the board will consider that at the right time

This is it: The historic moment passed in a flash as the Chairman proposed that all six resolutions be passed in a single vote since they were all interdependent.

The resolutions passed in a single vote;
- Created 117 million new shares to accommodate Stanbic
- Empowered the directors to allot shares to Stanbic
- Changed the name of the company to CFC Stanbic Holdings
- Transferred the bank business (assets, liabilities, employees, creditors etc.) to Stanbic
- Amended the new articles of association
- Changed the business of the company from a bank to holding company

Now CFC Stanbic holding co to remain listed on the NSE while CFC Stanbic Bank will be a 100% owned subsidiary

Other speakers

Craig Bond: The Head of Stanbic Africa, said they got lucky in Kenya as the first bank they identified turned out to be the right partner offering great synergies; in Nigeria they have looked at 6 banks which have not panned out. He said that Stanbic which intends to be the ‘best emerging markets bank’ in the world had identified 3 countries that they intended to dominate in Africa – SA, Nigeria and Kenya where they intend to break into the top 2 (not remain #4), by rapidly expand branches in 2008

Commenting on the largest bank in the world ICBC buying 20% of Stanbic (it’s 70% owned by government of china) - he said China is coming to Africa in a big way for her resources, and it offered Stanbic cheap money with the promise to match them $ for $ in any investment in Africa

NSE Chairman Jimnah Mbaru said he was proud that the deal happened under his watch and confirmed that he expected NSE to approve the deal by end of the week. He looked forward to having a big institution with the capital to enable economy to meet growth goals in terms of resources. And finally called out to family owned companies to see what could happen if they transform themselves into institutions as the late Mr. Jani had done with his firm which was now merging with Stanbic.

There were further tributes to the late Mr. Jani who created the company in 1951 with a vision for into to partner with an international power house, MD Soundararajan and directors Njonjo and Kierieni for making the deal happen

Humorous moment: Chairman Charles Njonjo was sad that there were only ‘5’ shareholders present when the meeting started, but got happy as the numbers had reached about 100 by the time it ended. However it didn’t really matter as he had 45% proxies from Africa Liaison and Gambit while fellow director Kierieni had 30%.

Goodies: souvenir pen, umbrella, big lunch box with little food from intercontinental – (fanta, cake, apple, and bit of goat, chicken and sausage)

other news

Barclays launched tranche one of its bond - 1 billion shillings, maturing in November 2014.

Rwanda and Burundi to join the East Africa Development Bank once they subscribed via share capital

Equity Bank extends banking hours to almost match office hours; 8 a.m. – 4:30 p.m. on weekdays and 8 a.m. – Noon on Saturday

The National Housing Corporation is offering investors loans to build rural and peri-urban homes. The maximum loan amount is only 1.5 million shillings – and it’s advanced at 13% over up to 10 years

Sasanet investors want to notify partners, bankers, and other companies (including safaricom) that the company had not refunded investors their funds.

Urban transport gets more expensive as all the major transporters Citi hoppa, KBS and matatu owners start a blanket 10 shilling per ride fare hike to counter rising fuel prices


Celtel territory sales executives (17). D/l is 16/11

IT manager at EA Cables. apply thru deloitte

Jamii telecommunications: account managers (3). d/l is 16/11

KBR various jobs in Iraq, Afghanistan pr Kuwait. But

Madison: finance manager, senior investments manager

Microsoft: public sector lead account manager - public sector & education solution sales professional (business productivity), infrastructure consultant, MBA graduate

Head of ICT services - Standard Group. d/l is 13/11

Chief operating officer at Renaissance capital. apply to by 19/11


Anonymous said...

Banks, my folks invested in Sasanet and i am trying to understand your post, whats the purpose of notifying ppartners, safaricom and bankc that they have not refunded funds to investors. Shukran. Your blog is one that i look forward to reading every week.

Trai said...

Banks, any idea why MSC went from over 40 to 13 in one week? The scheap imported sugar or selling for safaricom IPO or a deeper issue?

Anonymous said...

Kiereini and Njonjo Members of the board here too? I see they are also on CMC's Board.

To be able to compete with the bigger banks, strategy?

MainaT said...

Tx for the EGM update banks.

Njonjo and the other old boys have found a perfect exit in Stanbic who have bought an excellent financial universal firm.

I am surprised the Kenyan investor chases Mumias instead of a classic like this tie-up. Only a 100 turned up? Mind you, it was a Monday and working antion and all that was busy...

The Black Mamba said...

I know the guys of sasanet and I can vouch for their character. Anyone who gave them a cent can forget about their 'investment'. I'm surprised that they ran sasanet successfully. Give them a few years and they'll be featuring in parliamentary PIC reports for defrauding the govt.

bankelele said...

Minto: Sasasent is semi-legit and have doen quite a lot of work for Safaricom. Sorry about the pyramids but enough warnings were there, and when the weaker ones collapsed, it was only a matter of time before even the 'stronger' ones crunched up.

Trai: Mumias supply of shares tripled after the bonus - so your one share of 39 became three worth 13 each.

aegeus: Those guys have done well as 'super directors' of several companies.
probably CFC Stanbic will go more retail now.

MainaT: Payoff is good for some of the major shareholders who got cash. CFC does not have that many shareholders, and the notice was suddent and entry was a bit restrictive

Ssembonge: One you perfect the game, you can replicate it over and over. I think the guys of (collapsed) Kenya Akiba Microfinance resurfaced as a Kenya Business cooperative society


What is your comment on the ongoing credit crunch in the global markets, and how it will affect Kenya?


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