New offer adds twist in rush to sell Spire Bank

A Dubai-based Singaporean fund has made a new offer for the purchase of Spire Bank, presenting a tough choice for the new board of Mwalimu Sacco that is this week also expected to receive a formal buyout proposal from a rival local lender.

Feonirich Investment Pte on Thursday handed the Mwalimu Sacco board an expression of interest offer (EoI) for the purchase of the teachers’ bank.

“Kindly accept this irrevocable EOI as our intent to negotiate in good faith for the purchase and acquisition of all shares, 100 per cent ownership, assume full control of operations and management, and injection of fresh capital for securities sustainability and potential growth of the herein mentioned commercial bank and finance business upon your agreement to the following terms,” it said in the offer letter dated April 7.

This comes ahead of an expected binding offer from a local large and highly profitable bank that on Thursday confirmed interest in Spire Bank during a closed session with the Finance committee of the National Assembly.

The board now has to decide on whether to go with an offer that will see the bank sold as a going concern or one that would see the local lender acquire Spire’s assets and liabilities and allow the teachers to tear up the bank’s license through liquidation at a cost of nearly Sh11 billion since the troubled bank admitted liabilities exceed its assets.

Spire Bank

The alternative would be to sell Spire Bank to several suitors on the table including the Dubai-based Singaporean fund.

Others who’ve shown interest in the teachers’ bank include a Hong Kong Stock Exchange-listed Chinese technology company that was last year licensed by the Central Bank of Kenya (CBK) to purchase a local microfinance bank. There’s also a group of local tycoons – representing Murang’a old money and political connections – who have tabled an offer to purchase the licence on a going concern basis.

A source at Mwalimu Sacco told the Nation that the asset purchase deal was the last option for the teachers but CBK had insisted that the strategic investor had to meet three stringent conditions, including proof of availability and the source of funds as well as experience in running a bank.

These conditions disqualify both the Chinese investor and the local tycoons from the race. It is not clear whether CBK will now approve the offer by the Dubai fund, which has grown to become one of Africa’s most active alternative asset management firms.

Sh90 billion

As at November 2019, the firm had approximately Sh90 billion in assets under management; invested in market-leading companies in fast-growing sectors and large real estate projects such as the Victoria Falls in Zimbabwe and Garden Estate in Nigeria.

If the Sacco chooses to sign a deal with the local lender, it would have to do it tactfully to avoid being snared by an ongoing court process challenging such a transaction.

A suit filed by Kenneth Otieno, a teacher from Siaya County, shows that the Sacco will be forced to write off Sh9 billion from their assets and re-capitalise the bank to the tune of Sh2 billion before the bank can be wound up.