UGANDA: CDC Group Exits Dfcu following period of Uncertainity

By :
Baluku Geoffrey

Commonwealth Development Corporation (CDC) Group of the United Kingdom that own 9 per cent of the shares in Dfcu limited has announced that it will exit the company after accepting to sell its shares to an external investor, Africa Tembelea has learnt.

The dfcu bank cautionary announcement dated 13th December 2019, was made in line with Rule 38 and 40 (1) of the Uganda Securities Exchange Listing Rules, 2003.

“Dfcu limited (the “company”) advises its shareholders and the general public that a significant minority shareholder has received and accepted an expression of interest for the purchase of its shareholding in the Company by another investor, which, if successfully concluded, may have material effect on the price of the Company shares,” Dfcu said.

“the transaction remains subject to obtainment of Regulatory Approvals and satisfaction of all conditions precedent,” the cautionary announcement added.

The bank has also advised shareholders and potential investors to exercise caution when dealing in the Company’s shares until a further notice announcement is made.

Dfcu which is majorly owned by Arise B.V (58%) has three significant minority shareholders, namely: CDC Group of the United Kingdom that holds 9.97%, National Social Security Fund (NSSF) of Uganda with 7.46% and Kimberlite Frontier Africa Naster Fund that holds 7.35%.

– Why CDC is selling? – 

In a June 14th 2018 letter to dfcu Bank, CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said that after half a decade of doing business with dfcu Limited, it was CDC’s “aspiration to exit in a manner that causes minimum disruption to the business and ensures the orderly trading of dfcu’s shares.”

Many financial analysists Africa Tembelea has spoken to, say it is normal for shareholders to sell their shares within or get buyers from outside when they think it is the right time to exit. However, some shareholders exit when they anticipate that the company’s business in future might not be profitable at the level they want it.

This latest announcement from dfcu comes at a time when the bank is facing challenges following the controversial acquisition of Crane Bank Limited (CBL) in January 2017. Dfcu is the holding company of Dfcu Bank which bought CBL as offered to it by the Bank of Uganda (BoU).

Recently Dfcu bank opted not to take up the freehold properties of Meera Investments Limited which had been leased to defunct CBL.

Africa Tembelea understands that Dfcu now wants BoU to compensate it for the loss of the properties it values at Shs47 billion even though it is understood it valued the same properties at Sh10 billion when it took over CBL in an estimated Shs200 billion.

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