Centum calls off sale for Kenya's Sidian Bank to Nigeria's Access Bank

Centum Investments, a prominent investment firm in Kenya, has decided to call off the sale of its 83.4% shareholding in Sidian Bank to Nigeria's Access Bank. The deal, valued at $35 million, would have marked the second-largest acquisition by Access Bank. The managing partner of Centum Capital Partners, Fred Murimi, shed light on the reasons behind this unexpected turn of events in a recent interview with CNBC Africa. The prospective acquisition between Centum Investments and Access Bank began in March 2021, with a share purchase agreement eventually being signed in June of the same year. Despite mutual intent and the inclusion of a long-stop date in the agreement, the deal faced significant delays, particularly in obtaining regulatory approvals. Delays persisted until December, six months after the agreement was inked, leading to a one-month extension to January of the following year. However, ongoing delays and changing economic conditions prompted Centum to reassess the terms of the transaction. Murimi highlighted how the economic landscape had shifted since the deal's inception, with rising inflation, interest rates, and currency depreciation influencing their decision-making. The disagreement over payment terms, particularly a deferred consideration to be paid two years post-closure, further complicated negotiations. Despite attempts to mitigate risk through upfront payments, an agreement could not be reached, ultimately resulting in the termination of the share purchase agreement. When questioned about the impact on Sidian Bank's financial position, Murimi assured that the bank remained in a solid position with adequate capital adequacy ratios and profitability. The initial purpose of the sale was to inject capital for expansion, a need that continues to attract interest from potential investors. Despite the deal falling through, various parties, both locally and internationally, have expressed interest in providing capital for Sidian Bank's growth. While the deal's collapse may have raised questions about its structuring and the influence of changing market conditions, Centum Investments remains optimistic about Sidian Bank's future. The investment firm's decision reflects a strategic reassessment in light of evolving economic circumstances and underscores the importance of aligning deal terms with the prevailing market environment. In conclusion, the failed acquisition serves as a reminder of the complexities involved in cross-border transactions and the need for adaptable deal structures in a dynamic financial market. Centum Investments' decision to halt the sale of Sidian Bank to Access Bank opens new possibilities for the Kenyan bank's growth trajectory, with a diverse range of potential investors waiting in the wings to support its expansion endeavors.