The KCB Group paid Sh25.1 billion for an 85% interest in the DRC lender Trust Merchant Bank (TMB) in a deal that gave them access to the huge, mineral-rich nation of Central Africa.
In its most recent annual report, the institution revealed the deal’s value for the first time, saying that it valued the DRC bank at Sh29.54 billion, including a goodwill (premium) of Sh3.07 billion.
When TMB’s net assets were Sh14.15 billion and KCB had finished the acquisition, the DRC lender’s book value or net assets as of December 2021 were valued at 1.49 times the transaction’s value.
At the time of the deal’s conclusion in December of last year, TMB’s net assets had increased from Sh14.15 billion to Sh25.93 billion, which led to a jump in price to reflect indications such the expansion of core deposits, the loan book, and cash and bank balances.
TMB cash and cash equivalents, for instance, rose from Sh104.38 billion the previous year to Sh129.15 billion this year, giving KCB a net cash inflow of Sh104 billion when the deal was finished. The lender reports that TMB generated Sh2.32 billion in sales and a pre-tax loss of Sh65 million in December.
According to the lender, pre-tax earnings would have been Sh3.04 billion and revenues would have totaled Sh15.29 billion if the deal had taken place at the start of the year.
Although the Rwandan branch was the most profitable affiliate outside of Kenya for KCB last year with a pretax profit of Sh3.69 billion, this means that the DRC business will compete with BPR Bank Rwanda for profitability this year.
Discussion about this post