Afreximbank President Jean-Louis Ekra (left) exchanges documents with Ifie Sekibo, Managing Director of Heritage Bank, following the signing of the $272 million facility agreement.
The African Export-Import Bank (Afreximbank) and Nigeria’s Heritage Bank today in Cairo signed the agreement formalising Afreximbank’s $272 million facility in support of Heritage Bank’s acquisition of Enterprise Bank from the Assets Management Corporation of Nigeria (AMCON).
Afreximbank served as the sole lead arranger for the $272 million, representing 80 per cent of Heritage Bank’s $344 million winning bid for Enterprise Bank. Heritage had paid 20 per cent of the bid, amounting to $72 million, upon winning the competitive bid, and was then required to raise the remaining amount within a set period conclude the acquisition.
Following solvency challenges due to undercapitalization, AMCON had intervened and taken over troubled Nigerian banks, including Enterprise Bank, Mainstreet Bank and Keystone Bank, injecting fresh capital to stabilize them before moving to divest these so-called “bridge banks” through competitive bids.
In a statement at today’s signing ceremony, Afreximbank President Jean-Louis Ekra said that the transaction was one that would bring value to the Nigerian government and to the country’s banking sector.
“It will also advance Afreximbank’s strategic goal of empowering Africans to participate in the continents’ strategic sectors and provide the Bank with a platform for expanding the financing of SMEs in supply chains in Nigeria,” he said, adding, “this deal, by all measures, will be one of the largest mergers and acquisitions deals in Nigeria, helping the Nigerian government stabilize its financial sector and create a better path for other African nations to follow while empowering entrepreneurial Africans to realize their ambitions of owning and managing an important financial institution.”
Also speaking, Ifie Sekibo, Managing Director of Heritage Bank, said that the conclusion of the acquisition gives Heritage Bank greatly enhanced reach to connect to a widely dispersed volume of customers in Nigeria, adding, “It will strengthen our product distribution through varied and increased points of presence and strengthen our market assertiveness and recognition.”
He said that Heritage Bank looked forward to opportunities to work with Afreximbank in some other products, particularly in the areas of factoring and the programme for ethnic food financing, which, he noted, could have a very positive impact on the agriculture and SME space.
The completion of the transaction, which was led by Afreximbank’s Corporate Finance and Advisory Services Unit, with Pan African Capital acting as Heritage Bank’s advisers, makes Enterprise Bank the first of the “bridge banks” to be successfully divested under Nigeria’s banking reform programme.