Fusion Capital Ltd has completed buying a 25 percent stake in REMU Microfinance Bank, in a move that will see the private equity firm inject working capital and divest its ‘debt only’ portfolio, to focus on providing pure equity and real estate financing to mid-market companies in East Africa.
This is in line with Fusion’s current strategy to invest only in private equity deals between US $1million to $5 million targeting this segment.
Fusion is a hybrid business financing and private equity house established in 2006 and operating in Rwanda, Kenya, Uganda, Tanzania and the UK.
It has obtained the Central Bank of Kenya’s approval for the stake in December 2013, after a thorough due diligence process and vetting of its directors.
REMU is a Microfinance Bank licensed by Central Bank under the Microfinance Act and Regulations (2008). The bank offers deposits and credit services to small and medium size enterprises. Presently, there are eight regulated microfinance banks in Kenya.
The banking sector in Kenya as a whole has seen 10-plus years of rapid growth as institutions have aggressively moved to bring people who were previously excluded to using banking services.
It is estimated that more than 30 percent of the population remains unbanked, offering opportunities for further growth [according to FinScope Survey report 2012].
The partnership will see the bank implement its new strategic plan to grow and expand its branch network and widen its product offering to include mortgage and housing products and electronic banking. In the deal, Fusion has two directors’ seats in the board and in the Credit and Audit committees.
REMU’s General Manager, Lydia Kibaara, said that the firm was excited about the partnership with Fusion as this will see them deliver on their expansion plan. She said: “Indeed, this partnership is strategic to REMU, we will benefit from Fusion’s expertise and support to grow our business.”
Luke Kinoti, Group Chief Executive at Fusion said: “We are thrilled about the new partnership. This is part of our strategy to strengthen our foothold in the financial services sector in the region, having invested in a diverse range of businesses including manufacturing, agro-processing, mining, hospitality among many others.”