Co-op Acquires Jamii Bora: The Co-operative Bank of Kenya is now set to acquire Jamii Bora Bank after finalizing the acquisition talks. According to a disclosure statement by Jamii Bora, Co-op has offered a Sh. 1 billion acquisition amount.
“Following the conclusion of a thorough due diligence and a special board meeting held on Wednesday, June 3, 2020, the board approved for recommendation to the shareholders a legally binding offer from Cooperative Bank,” said Jamii Bora Bank chairman Richard Kiplagat.
Co-op Bank will be issued with 224.1 million new “Class A” shares equivalent to nine times the volume of stock held by the existing shareholders. “Allot … new shares subject to payment by Co-operative Bank of Kenya Limited of the aggregate subscription price of Sh. 1 billion (being Sh. 4.46 per new share), on completion of the proposed investment,” reads part of the disclosure report by Jamii Bora to shareholders.
The move by Co-op to acquire Jamii Bora is set to deepen its market share in the small and medium enterprises category. In a market review by global rating agency Moody’s, the acquisition of the Jamii Bora Bank will provide Coop Bank with the platform to grow its SME loan book. “Co-op Bank will absorb JBB, Kenya’s second-smallest bank without affecting its credit quality and will gain JBB’s small and midsize enterprises focused business,” said Moody’s. “The acquisition would be credit positive for both banks and the country’s banking system. JBB’s SME-focus and expertise will help Co-op Bank expand its SME footprint in Kenya.”
This is echoed by Co-operative Bank’s chief executive officer Gideon Muriuki. “The group has continued with a strategy for continued deepening and dominance in our domain market segment leveraging on our successful penetration of the micro, medium and small enterprises (MSMEs) and the Saccos, while reviewing opportunities to grow alternative income streams,” Dr. Muriuki said.
The Co-op Bank was started in 1965 and is predominantly owned by 15 million members of the Kenyan co-operative movement. It was listed on the Nairobi Securities Exchange in 2008. It was ranked 4th out of 39 banks in terms of market share as at December 31, 2019 with a market share of 9.63 per cent. The bank has a 159 branches across Kenya and South Sudan.
On the other hand, Jamii Bora was established in 2010 after the acquisition by City Finance Bank Limited of the business of Jamii Bora Kenya Limited, a micro finance institution. It was ranked 38 out of 39 banks in terms of market share as at December 31, 2019. The bank had a market share of 0.12 per cent with 17 branches across the county. Co-op Acquires Jamii Bora.