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Afribank signs MoU with core investors

By on April 6, 2011

Afribank Nigeria Plc has signed a Memorandum of Understanding (MoU) with Vine Capital Partners Limited and Phoenix Acquisition Company Limited. It is the outcome of some negotiations which started since last year.

Afribank said in a statement yesterday that the MoU, provides a framework for the process by which the bank will be recapitalised, adding, however, that the process is subject to the approval of the bank’s shareholders, the Central Bank of Nigeria, the Securities and Exchange Commission, the Nigerian Stock Exchange and the Federal High Court.

Vine Capital Partners is an emerging markets private equity firm with interests in banking and financial services in Sub-Saharan Africa. The Vine Capital Consortium is made up of local and international firms.

The signing of the MoU between Afribank and the intending core investors confirmed the statement by the Central Bank Governor, Sanusi Lamido Sanusi, that three banks would announce their core investors in two weeks.

Within the period, Union Bank of Nigeria revealed its engagement with the African Capital Alliance Consortium (ACA Consortium) in which $750 million (about N114 billion) is expected to be injected into the bank’s coffers as a first step towards its eventual recapitalisation. This is in addition to the over N239.5 billion investment by the Assets Management Corporation of Nigeria (AMCON), which will push the bank’s financials from weak to mega status.

The ACA Consortium is a group of institutional investors led by African Capital Alliance (ACA), a leading independent private equity firm investing in West Africa, principally in Nigeria and the Gulf of Guinea. The group is seen as highly skilled technical and a versatile global professional investors that will drive Union Bank’s service, making it very attractive to investors, customers and other international players alike.

In addition, Access Bank Plc and Intercontinental Bank Plc have also reached an understanding through the MoU they have initialled, which industry whatchers have reasoned will lead to the emergence of a formidable financial institution in the sector.

The merger is the outcome of what Access Bank’s management said has been a painstaking effort that followed international best practices. The bank said the exercise would produce a safe harbour for Intercontinental Bank’s N670 billion depositors’ funds. This assertion by Access Bank is corroborated by the fact that the Nigeria Deposit Insurance Corporation (NDIC) coverage for the banking industry is less than N40 billion.

The latest announcement by Afribank completes the first round of three banks among the rescued banks that are closed to being recapitalised.

Source : The Nation