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Nedbank to Own 20 Percent of Ecobank After Debt Conversion

August 19, 2014

Obinna Chima with Agency Report



Pan-African lender, Ecobank expects South Africa'sNedbank to convert a $285 million loan to shares in the Lome-based bank before the end of the year.

Ecobank's Chief Executive, Albert Essien said he was confident Nedbank would exercise the conversion option and also top up the conversion amount with $206 million to give it a 20 per cent stake in Ecobank.

After the Nedbank deal, Ecobank expects its capital adequacy ratio to hit 18.7 per cent of assets by year-end, up from the 17.5 per cent it was in the first six months of the year, Reuters quoted Essien to have told an analysts conference call on its half-year results.

"The Nedbank stake is capped at 20 per cent. If they do convert ... I think that will strengthen the business relationship that we have (had) since 2008," Essien said.

He added that: "The conversion will trigger reciprocal board seats. We see it as very positive and we expect that it will happen."

Nedbank's chief executive, Mike Brown, had told Reuters two weeks ago that it had until November to decide if it will take the 20 per cent stake in the Togo-based bank, under a strategic alliance it has with Ecobank. Shares of Ecobank, listed on the Nigerian Stock Exchange (NSE), which has so far climbed by 6.3 per cent this year, rose to 2.79 per cent on Monday to N17.20 per share.

Essien also said he expected another institution EIB to convert about $58 million of debt into shares.

Last month Ecobank, which has a presence in 36 African countries, reported 27 per cent rise in its first-half pre-tax profit to N41.67 billion. Chief Financial Officer, Laurence do Rego, said on the conference call that the lender was aiming for a 15 per cent growth in lending in 2014, after it achieved eight per cent in the first half, of which Nigeria accounted for 40 per cent of total loans.

Essien said Ecobank had recently set up operations in Mozambique and secured a banking licence in Angola.

Ecobank Nigeria recently sold $200 million of dated subordinated notes due in 2021 to join lenders in Africa's largest economy raising funds through debt sales.

The issuance has a yield of nine per cent and a coupon of 8.75 per cent, Bloomberg quoted a source to have said.


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Source: AllAfrica


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