Fidelity Bank has announced a deal with Duet Private Equity that will inject Ksh. 1.9 billion into the Bank. This will strengthen the Bank’s capital base and support its expansion both locally and in the region. The deal is subject to regulatory approvals but once it goes through the Bank’s capital base will grow to Ksh. 3.8 billion.
The Central Bank of Kenya last week came out to rubbish claims that Fidelity Bank will be placed under statutory management. There have been rumours on social media that the bank will be under statutory management and this may have caused anxiety for stakeholders and customers. The Central Bank’s assurance that the bank is not going under statutory management will hopefully reassure customers and clients that the bank is stable.
Central Bank rubbishes reports that Fidelity Bank will be put under receivership, says rumours circulating on social media are ‘baseless’.
— NTV Kenya (@ntvkenya) March 24, 2016
The Duet Group which is providing the capital for expansion of the bank has its headquarters in the UK. It is a global alternative asset management firm with over US$5.6 billion of assets. This new capital injection will be made through The Duet East African Financial Holdings Ltd Fund, which is part of the Duet Group.
Sultan Khimji, Fidelity Bank’s Executive Director said the funds will enable the bank to be able to engage in larger transactions as well as be able to increase the customer base.
“Duet’s investment in the form of growth capital is very significant for Fidelity Bank in its transformation to a mid-tier bank. None of the Bank’s existing shareholders are exiting as we are all very confident about the bank’s future,” said Khimji. “This deal with Duet Group brings us closer to our stated objective of growing to a mid-tier category bank and listing on the Nairobi Stock Exchange (NSE) in the future,”
Duet Group Co-Founder and Chief Executive Officer, Mr. Henry Gabay said that the deal gives Duet the perfect platform to invest in the Kenyan banking sector. He said it was an opportunity.
“We have been looking at Kenya for some time now and we see the Kenyan banking sector as an opportunity which will require growth capital as well as numerous consolidation opportunities in the sector. Fidelity Bank is a reputable, well-managed institution with an experienced team whom we are looking forward to working with. They have a robust financial technology platform and an aggressive expansion plan which we are looking to support both organically and by acquisition,” said Gabay.
Fidelity Bank was started in 1988 by Sultan Khimji and was incorporated the African Finance Company. In 1992 it was transformed into Fidelity Finance in 1992, and became a fully-fledged commercial bank in 1996. The bank is planning to list on the Nairobi Stock Exchange in 2018. The bank currently has 14 branches located in Nairobi, Eldoret, Diani, Malindi and Mombasa. Fidelity wants to expand to 28 branches across East Africa by 2018. The bank is in the process of building the Fidelity plaza, a 7 story centre in Westlands which will be their headquarters.
Duet has been investing in Africa and so far they have made private equity investments in Ethiopia, Ghana and Ivory Coast in the FMCG sector. Over the past five years, Duet Group has invested in excess of US$1.7 billion in emerging markets including sub-Saharan Africa.