British’s Commonwealth Development Corporation (CDC) Group is selling its entire 9.97% stake in dfcu Bank – a move that according to commentators could shake up the country’s financial landscape.
CDC Group has been a long-time shareholder in the venerable bank, which for most of the British investors to Uganda have been using.
dfcu Bank on Monday, December 16, 2019, published in the local dailies, a cautionary statement, dated 13th December 2019 informing its stakeholders of an imminent acquisition deal.
“dfcu Limited (the “Company”) advises its stakeholders 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 a material effect on the company shares,” dfcu Bank noted warning its shareholders and potential investors to exercise caution when dealing in the bank’s shares until a further announcement is made.
This website has learnt that Danish Development Finance Institution is the preferred investor to acquire 9.97% shareholding held by CDC Group Plc in dfcu Bank.
dfcu Bank is Uganda’s 4th largest bank, by assets as at end of December 2018 but its shares continue to trade near all-time lows – posting losses in the past three years to shareholders.
dfcu Bank has been in turmoil after risky investment banking bets and criminal behavior resulted in lawsuits by businessman Sudhir Ruparelia.
dfcu which is majority-owned by Arise B.V (58.7%) 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%.
Local media, the CEO Magazine quoting Andrew Murray-Watson, the Corporate Communications Advisor at CDC, reported that he declined to comment.
“In response to your inquiry, I am unable to comment. Sorry not to be of more assistance,” he replied to a journalist who had inquired about the imminent transaction.
However, CDC Group Plc which is wholly owned by the UK Government had in June 2018 indicated that it was “undertaking a review of its investment in dfcu Limited which may lead to the disposal of some or all of its shares in dfcu over the short to medium term.”
For such a deal to go through, it would have to be approved by the Central Bank but Dr. Tumubweine Twinemanzi, the Executive Director, Supervision at Bank of Uganda in a phone interview with this reporter declined to confirm if indeed it was the Danish Development Finance Institution that was acquiring CDC’s stake but confirmed that there were entities being vetted by the Central Bank for this acquisition.
