Takeover Bid by Ghana’s UniBank in Doubt as Regulator Balks

ACCRA (Capital Markets in Africa) – UniBank Ghana Ltd. agreed to buy a controlling stake in Agricultural Development Bank Ltd. from a group of exiting investors in a deal that still needs to win support from the country’s central bank.

The planned takeover comes as lenders in Ghana scurry to meet an end-of-the-year deadline to bolster their capital buffers. The new rules are part of a government effort to create stronger banks better able to support economic growth by financing more projects. It would be the first deal since the central bank in August approved a transaction that resulted in Ghana Commercial Bank Ltd. incorporating the deposits and some assets of two smaller lenders that failed to meet capital requirements.

The transaction was thrown into doubt after Accra-based Graphic Online cited a person familiar with the central bank’s stance as saying that the regulator will declare the deal null and void because it didn’t know about it. “The Bank of Ghana has not approved the purported takeover of ADB or any transfer of shares from ADB to the UniBank,”  Bank of Ghana Governor Ernest Addison said in a comments later broadcast by Accra-based Citi FM. Calls to the central bank weren’t answered. 

The Ghana Stock Exchange said it suspended trading in ADB’s shares to allow the bourse time to clarify news on the takeover. The securities have gained 98 percent since they started trading in December 2016.

Shareholders Exiting
Belstar Capital Ltd. is leading a group of shareholders who have pledged 53 percent of their holdings in ADB to UniBank, Kwabena Duffuor, the managing director of UniBank, said in comments broadcast on Citi FM radio earlier on Wednesday. He declined to give the value of the transaction.

Belstar Capital — which provides project finance in Africa, Asia and Latin America from its offices in Washington, Miami, Madrid and Accra — plans to exit its 24 percent stake in the agricultural lender, Solomon Atefoe, a spokesman for ADB said by phone. Belstar’s affiliate, Starmount Development Co., had also put forward its 11 percent holding for the deal, while SIC-Financial Services Ltd. was planning to surrender its shares to Belstar to repay debt, which would’ve then been ceded to UniBank, Atefoe said.

EDC Investment Ltd. decided to join the fray by pledging its 6 percent to UniBank, he said. The Bank of Ghana owns 9.5 percent of ADB, while Ghana’s government is the biggest shareholder with 32 percent, according to data compiled by Bloomberg.

“The industry is littered with foreign banks,” UniBank’s Duffuor said. “Usually it is the local banks that understand the terrain and can grant the needed support to businesses for the country’s progress. It is better for local banks to come together and entrench themselves so they can help the Ghanaian economy.”

The transaction will progress to the stage of a proper transfer, during which payments will be made and the nation’s Securities and Exchange Commission will be notified and regulatory approval sought, Duffuor said.

Source: Bloomberg Business News