5 July 2013
South African financial services group Old Mutual is expanding its African operations with the acquisition of a controlling stake in micro-finance company Faulu Kenya.
The deal, which makes up a portion of the R5-billion the company has set aside for African growth, is expected to reach completion by the end of 2013, dependent on regulatory approvals and the finalisation of legal agreements.
Old Mutual Kenya comprises part of the long-term savings and investment business of the Old Mutual Group, which is listed on the Johannesburg and London Stock Exchanges.
It was selected after a two-year process that saw Faulu engage with over 20 potential financial partners and narrow it down to six local and international institutional investors.
“The exercise entailed a rigorous vetting process to pick the best suited partner in line with Faulu’s commitment to being a financial bridge to success for Kenyans,” Faulu managing director, John Mwara, said in a statement on Thursday.
Faulu was established as a loan scheme in Nairobi in 1991 and expanded into a micro-financing firm. It was the first micro-finance institution to be licensed to mobilise deposits from the public by the Central Bank of Kenya in 2009.
It now has over 100 service outlets, including 31 banking branches in 44 of the 47 counties in Kenya with over 400 000 active customers.
“This deal confirms Old Mutual Kenya’s commitment to availing affordable insurance products to millions of Kenyans through strategic partners like Faulu, whose fast expanding branch network creates an excellent distribution channel,” said Old Mutual Kenya CEO, Tavaziva Madzinga.
“I am delighted that we have agreed this partnership with Faulu,” Old Mutual Emerging Markets chief executive officer, Ralph Mupita.
“We continue to see further opportunities for the development of our business across East Africa.”