{UAH} Things fall apart: Commonwealth Development Corporation (CDC) pulls out its investment plans in Uganda’s DFCU bank
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Things fall apart: Commonwealth Development Corporation (CDC) pulls out its investment plans in Uganda's DFCU bank
The Commonwealth Development Corporation (CDC), Britain's oldest development finance institution has elected to opt out of it's investment arrangement in Uganda's DFCU bank, according to the reports.
CDC which is Britain's oldest Development Finance Institution, joined hands with the Government of Uganda in 1964 to set up Dfcu.
CDC's investment in Dfcu, according to the institution's official website, is US$15.1m (equity) and US$10m (subordinated loan)
According to information available, CDC on June 14 has notified the DFCU Board and other shareholders that they would sell their stake.
CDC's Investment Director Irina Grigorenko, said it was "undertaking a review of its investment in DFCU Limited which may lead to the disposal or some of some or all of its shares in DFCU over the short to medium term."
"After being a shareholder for half a decade, it is our aspiration to exit in a manner that causes minimum disruption to the business and ensures the orderly trading of DFCU's shares," Grigorenko was quoted by the British Press.
Grigorenko also indicated that CDC's objective is to identify "like-minded investors who could support DFCU in its new phase of growth."
The institution said after being a shareholder for half a decade, "it is our aspiration to exit in a manner that causes minimum disruption to the business and ensures the orderly trading of DFCU's shares."
Irina also indicated that CDC's objective is to identify "like-minded investors who could support DFCU in its new phase of growth."
It remains unclear how this will affect the bank but CDC expressed hope that DFCU would continue to "succeed with the support of Arise B.V., its major shareholder."
It is evident that the CDC exit, a major industry blow for the DFCU has been precipitated by the bank's controversial acquisition of Crane Bank Ltd. It is said that after Crane Bank Ltd shareholders protested the takeover of branches by DFCU, it unsettled the board after CBL insisted that branches weren't part of the bank as they fall under Meera Investments Ltd . CDC and two other partners opposed the deal and accused DFCU bosses especially the Managing Director Mr. Juma Kisaame for not carrying out enough due diligence. The British investor has now acted.
DFCU has in recent months been battling former Crane Bank shareholders over property worth millions of dollars.
DFCU recently acquired Crane Bank from Bank of Uganda, a transaction that has sparked a heated legal battle in Ugandans courts of law.
Officials who spoke on condition of anonymity said CDC's exit would not affect its liquidity as Arise maintains a strong financial muscle.
Arise's investment portfolio includes Equity Bank, BPR, Zambia National Commercial Bank (Zanaco) and NMB (Tanzania) among others.
CDC said in its letter to DFCU that with the knowledge of the company and Arise B.V., "we have held preliminary discussions with a small number of potential investors" which include Cranemere Africa Limited and responsAbility Investments AG.
Cranemere is a holding company for outstanding businesses in the United States and Europe. Its shareholders are major families and institutions from the United States, Europe, the United Kingdom, Latin America, and the Middle East.
Cranemere's chairman and founder is Vincent Mai who previously led AEA Investors, a private equity firm founded to make investments on behalf of Rockefeller, Mellon, and Harriman families.
The company's CEO is Jeffrey Zients who previously served in President Barack Obama's government as the acting director of the Office of Management and Budget.
On the other hand, responsAbility Investments AG describes itself as an asset manager in the field of development investments and offers professionally-managed investment solutions to private, institutional and public investors.
A private Swiss enterprise, founded in 2003 and headquartered in Zurich, responsAbility says its investment solutions supply debt and equity financing predominantly to non-listed firms in emerging and developing economies.
The company says its total assets are worth $3bn and has invested in Procredit Group (Germany) at the Chase Bank Kenya Limited (Kenya) and Hattha Kaksekar Limited (Cambodia).
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