CDC Group plc (CDC), the UK’s development finance institution, has announced it will take a 10.68 per cent equity stake in the Nairobi-headquartered banking group I&M Holdings (IMHL). The investment underlines CDC’s commitment to supporting lending to small and medium sized enterprises (SMEs) in East Africa.
Founded in 1974, IMHL’s commercial banking operations in Kenya rank in the country’s top ten, serving more than 100,000 customers. Having embarked on regional expansion in 2008, the bank now also has operations in Tanzania, Rwanda and Mauritius, and is actively pursuing opportunities in other countries.
East Africa remains an economic bright spot in the midst of challenging conditions in much of Africa. The East African Community is making strides towards greater economic integration of a market with a combined GDP of US$145bn.
Despite this, the growth of many businesses is constrained by a shortage of affordable finance. Through its partnership with IMHL, CDC will promote access to finance, particularly to SMEs, which are important contributors to economic growth in the region.
The investment, which is subject to regulatory approvals, will be made through the purchase of the stakes in the holding company held by DEG and Proparco (the German and French development finance institutions, respectively) and will make CDC a significant shareholder in IMHL.
Other recent CDC investments include the Garden City, a real estate development in Nairobi, and the Akiira geothermal plant in the Rift Valley. Within the East African banking sector, in September 2015, CDC announced it had bought a stake in CRDB Bank, Tanzania’s leading provider of financial services.
Suleiman Kiggundu, CDC’s Regional Director for Africa based in Nairobi said:
“IMHL has a strong track record of lending to the SMEs and local corporates that play such an important role in job creation and economic development in East Africa. CDC’s commitment to building long-term partnerships and its expertise in financial services will help IMHL reach even more entrepreneurs.”
“Two years ago, we identified I&M as a well-run banking group, with strong governance and solid operations and have since built a close relationship with the bank’s shareholders and management. CDC’s proposed investment in IMHL allows us to work together to expand banking services across East Africa and beyond.”
Sarit Raja-Shah, Director of IMHL and Executive Director at I&M Bank, said:
“We are excited to welcome CDC as our new DFI shareholder and we look forward to this partnership as we continue with our regional growth and consolidation strategy.”
Together with CDC, we are committed to helping both existing and new clients to build their businesses within Kenya and across the region. CDC’s involvement with I&M is important because it allows us to continue to draw upon the DFI support previously provided by DEG and Proparco in terms of strategic, financial and governance matters. We also view this as a vote of confidence from a major international DFI for the Kenyan banking industry.”
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