EQUITY BANK (KENYA) LIMITED
Status: Approved investmentWhy disclosure?
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Disclaimer
The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.
Who is our customer?
Equity Bank (Kenya) Limited ("EBK") is the fully owned subsidiary of Equity Group Holdings Plc (“EGH”), a non-operating holding company (the “Group”) and one of the largest financial service groups in East and Central Africa. EBK commenced operations in 1984 as Equity Building Society then. The Bank has grown to become the second largest bank by assets today with a key focus on the underserved MSME segment and a strong digital offering. EBK is the largest subsidiary in the Group, accounting for about 80% of the Group’s total assets. EGH is listed on the Nairobi Securities Exchange since 2006 and operates in six countries in East and Central Africa (Kenya, DRC, Uganda, Tanzania, Rwanda and South Sudan).
What is our funding objective?
FMO is participating as a B-Lender in a Syndicated Basel II Subordinated Loan of up to USD 165mln to EBK. The financing package is arranged by IFC and comprised of (i) up to USD 50mln for IFC’s own account and (ii) up to USD 115mln mobilized from B-lenders and/or parallel lenders. FMO has committed USD 25mln to the facility. The loan will enhance the Bank’s regulatory capital, which has been affected by deteriorating asset quality as a result of COVID-19, and the funds will be earmarked towards EBK’s SME and climate finance portfolio. Being a B-lender, FMO does not engage directly with the end-recipient on this deal.
Why do we fund this investment?
EBK is an existing client of FMO and a systemic bank (2nd largest by assets) with a solid financial track record EBK and strong reputation. It is an important partner for promoting financial inclusion across East and Central Africa. The Project will help shore up EBK’s capital and facilitate increased lending to Kenyan SMEs (including climate finance), whose activities are vital for the sustainable country’s recovery amid the COVID19 pandemic. IFC, a member of the World bank Group, is the largest global development institution focused on the private sector in developing countries. It is one of FMO’s key financing partners.
What is the Environmental and Social categorization rationale?
EBK is classified as E&S Category A in accordance with the EDFI E&S Standards. The clients in EBK’s portfolio are active in sectors which have potential significant and adverse environmental and social impacts, such as mining, food and agriculture and energy & water. EBK has an E&S Policy as well as an E&S Risk Management Procedure. The two documents comprise the bank’s ESMS. The ESMS was initially developed in 2011, with the last revision exercise taking place in 2021. EBK recently set up an E&S risk department which resulted in a significant increase in internal E&S capacity to mitigate the negative E&S impacts of its financing activities. IFC as the lead arranger and facility agent is responsible for monitoring and following up on the ESAP implementation.
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| Date | Total FMO financing |
|---|---|
| 12/10/2020 | USD 37.50 MLN |
| 5/7/2021 | USD 25.00 MLN |
- Region
- Africa
- Country
- Kenya
- Sector
- Financial Institutions
- Effective date
- 12/17/2021
- Total FMO financing
- USD 25.00 MLN
- Funding
- FMO NV
-
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk
Environmental & Social Category
(A, B+, B or C) - A