Equity Group Holdings Plc has discontinued a deal to acquire banking business from Atlas Mara Limited (ATMA) in four African countries: Rwanda, Tanzania, Zambia and Mozambique.
In a statement issued in Nairobi on Tuesday, 23rd June, Equity Group said it had mutually agreed to end the ongoing talks, citing the effects of the Covid-19 pandemic on both the world and economies.
The decision is consistent with the board’s view of uncertainty of risk, which precipitated the proposed withdrawal of a Ksh9.5 billion dividend pay-out to shareholders.
“After careful consideration, EGH and ATMA have mutually agreed to discontinue discussions on the proposed transactions, or a variant of it, for the foreseeable future,” read part of the statement.
“The reasons for this decision, include the need to refine EGH’s strategy given the Covid-19 pandemic. This refinement entails conserving cash and liquidity including the non-declaration of dividends for the financial year ended on 31st, December 2019 and deploying it to support customers in existing businesses.
“At the same time management will continue to place focus on accelerating the push to digital channels and growing the Equity Group’s various non-funded income franchise while re-evaluating the acquisition of new businesses where significant capital and managerial attention is required.”
The managing director and CEO of EGH Plc, Dr James Mwangi, said that the board’s decision was in line with its business continuity management that speaks to risk assessment, approach to prudent risk mitigation and management in the prevailing economic slowdown occasioned by the Covid-19 pandemic in the region and globally.
“The board’s business continuity management is focused on conserving cash and liquidity and deploying it to support our customers to survive during this economic crisis and to recover and thrive post the crisis. A strong capital and liquidity position gives us the strength and capacity to cushion our business, accommodate and walk with our customers during these challenging times,” he said.
“We have deployed a defensive and offensive mechanism through loan accommodations and restructuring of up to 25 percent of the total loan book for periods of up to 36 months. This will enable our customers to go through the prevailing turbulence, while at the same time preserving cash to shore up the financial revival and growth of their businesses post the Covid-19 crisis.”
He noted that the group was committed to its strategic objective of expanding its footprint in Africa to provide access to competitive and tailored financial services to improve people’s lives and livelihoods. It would do so whilst also delivering significant value to its stakeholders and to its vision of building sub-Saharan Africa’s premier financial institution through innovative products and services, including the effective use of technology self-service banking.