Branch International Limited has become the first mobile digital lender to acquire majority stake in a banking institution more than a month since the law regulating digital lenders came into force.
Central Bank of Kenya (CBK) announced on Tuesday that Branch, a digital credit provider has acquired 84.89% stake in the microfinance lender for undisclosed fee effective January 1, 2022.
The deal had received the banking regulator’s node on December 30, 2021 and National Treasury Cabinet Secretary Ukuru Yatani on January 7, 2022.
The transaction comes on the backdrop of the Central Bank of Kenya (Amendment) Act 2021, a law which has been introduce to regulate the digital lending space.
According to CBK, Branch which was incorporated in Kenya on April 2, 2015 is wholly owned by Branch International Holding Limited based in Mauritius.
The Mauritius parent company is fully owned by Branch International Inc., a company incorporated in Delaware, United States of America.
“Branch is one of the largest mobile application based lenders in the country and brings financial services to the emerging markets by leveraging on the powers of technology. Branch’s total assets stood at Kshs. 1.1 billion as at December 31, 2020,” CBK said in a statement.
The acquisition now gives Branch access to deposits held by Century MFB being the majority shareholder which digital lenders are prohibited from engaging in.
Century MFB was licensed in 2012 to carry out microfinance banking business across the country.
The micro lender with less than 1% of the market share currently has two branches in Nairobi with a customer base of 26,000 comprising small holder famers and Small and Medium Enterprises.
CBK says it has been working with microfinance institutions to transform their operations in line with the advancement in technology in order to strengthen their capital and liquidity buffers.
“CBK welcomes this transaction that is critical component of Century MFB’s transformation plan. It will strengthen Century MFB ad support the stability of the microfinance sector.”
Key MFB acquisition
The central bank has also announced acquisition of a 73% stake in Key Microfinance Bank Plc by LOLC Mauritius Holdings Limited for undisclosed fee effective January 1, 2022.
LOLC Mauritius is wholly owned by LOLC Holdings PLC, a Sri Lanka based conglomerate holding investments in financial and non-financial entities listed on Colombo Stock Exchange.
According to CBK, the Sri Lankan parent company operates several microfinance businesses in Asia and targets expansion in Africa having purchased two microfinance banks in Nigeria and Zambia is 2019 and 2020 respectively.
The group has assets totaling $4.4 billion (Kshs. 497 billion).
Key MFB is a licensed deposit-taking microfinance with three branches and one deposit taking marketing unit in Nairobi and Meru.