Doha-based Qatar National Bank (QNB) has expressed its preparedness to be the largest financial institution in Africa as well as the Middle East by 2017.
This followed its acquisition of 12.5 per cent stake in Ecobank Transnational Incorporated (ETI) last week.
QNB acquired a total of 1,767,612,630 ordinary shares and 732,277,056 preference shares in of ETI.
QNB bought the shares from the Asset Management Corporation of Nigeria (AMCON), through a deal on the floor of the Nigerian Stock Exchange (NSE).
The investment was QNB’s first acquisition in ETI and marked the bank’s first entry into Africa.
The acquisition of the ordinary shares was expected to be completed three days from last Thursday, while that of the preference shares would be subsequently.
QNB expects to be a long term investor in ETI. According to QNB’s website, the bank was established in 1964 as the country’s first Qatari-owned commercial bank and has an ownership structure split between the Qatar Investment Authority (50 per cent) and the private sector (50 per cent). It is listed on the Qatar Exchange.
However, Banking Analyst at Renaissance Capital (RenCap), Mr. Adesoji Solanke viewed the transaction as slightly positive for ETI.
“It’s good to see that the group still attracts such strong institutional interest post the corporate governance issues last year and at a modest premium to market,” he said.
Solanke stated that the deal was executed at N20.01, compared to current market price of N17. This implied a premium of 18 per cent.
The transaction also represented a nine per cent premium to the Nedbank conversion price of N18.40 ($0.115).
“We think QNB probably gets to appoint a replacement for AMCON’s seat on the board down the line.We estimate the deal cost to QNB at about $290 million ( larger than current market cap of Skye Bank ($230 million) or Bank of Kigali ($251 million), inclusive of the preference shares, which implies a 12.40 per cent stake in ETI by our estimates.
“The preference shares are convertible to ordinary shares from between October 31, 2014 to October 31, 2016, failure of which ETI has the right to redeem them into ordinary shares,” he added.
But he pointed out that an important dynamic would be what the deal means for Nedbank’s Africa entry strategy via ETI.
“We still expect the Nedbank conversion and top-up to 20 per cent stake to happen before year end. We will watch as developments unfold,” he added.