Private equity consortium Vine Capital will recapitalize Nigeria’s Afribank, Reuters reported. Vine Capital includes a consortium of local and international firms. No terms of the deal were released, Reuters reported, adding that the deal must obtain shareholder and regulatory approval. Afribank, one of Nigeria’s oldest banks, has a market value of roughly $165 million.
(Reuters) – Nigeria’s Afribank (AFRIBAN.LG) said on Tuesday it had signed a recapitalisation agreement with private equity consortium Vine Capital, 18 months after being rescued in a central bank bailout.
The commercial and retail bank, one of Nigeria’s oldest, said the deal with Vine Capital, a consortium of local and international firms, still needed shareholder and regulatory approval. It gave no financial details.
“The memorandum of understanding provides a framework for the process by which the bank will be recapitalised,” Afribank said in a statement.
Afribank, whose shares rose 2.7 percent on Tuesday, has a market value of 25.6 billion naira ($165 million).
Before the bailout it was Nigeria’s seventh-largest bank by assets but has since made significant writedowns. Its shares are 71 percent free float, 28 percent under asset management nominee accounts and 1 percent held by directors.
Central Bank Governor Lamido Sanusi won international praise for the 2009 bailout and efforts to sanitise the banking system in sub-Saharan Africa’s second-biggest economy, which was dangerously close to collapse.
The removal of several bank chiefs for lax oversight and reckless lending sent shockwaves through a corporate elite which had grown used to impunity.
But uncertainty over how the crisis would be resolved has meant credit flows have not fully recovered and has kept some investors shy of once stellar Nigerian banking stocks.
AMCON, a state “bad bank” set up last year, has absorbed the non-performing loans from the rescued banks as part of plans to return them to zero shareholders funds before new investors bring them to minimum capital levels.
Afribank, which has about 300 branches and close to 3,000 employees, is the third rescued lender to announce an agreement with new investors.
Intercontinental Bank (INTERCO.LG) will merge with healthy local peer Access Bank (ACCESS.LG), while Union Bank (UBN.LG) has announced a $750 million deal with a consortium led by the African Capital Alliance private equity firm. [nLDE72Q0IT]
Two other rescued lenders, Bank PHB (PLATINU.LG) and Oceanic Bank (OCEANIC.LG), are also expected to announce deals soon. (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Writing by Nick Tattersall)