Lagos-based Afribank Nigeria Plc. has signed a memorandum of understanding (MoU) with Vine Capital Partners and Phoenix Acquisition Co Ltd for recapitalisation, the Nigerian lender has disclosed. Vine Capital Partners consortium is reportedly linked to Rana Kapoor’s Yes Bank.
The quantum of money involved in the recapitalisation has not been disclosed. But an African media organisation ThisDay quoted an unnamed source privy to the deal, as saying that the deal involved $300 million for 55 per cent of the bank while existing shareholders and the Asset Management Company of Nigeria (AMCON) will hold the remaining 45 per cent in Afribank.
Afribank described Vine Capital Partners as an emerging markets private equity firm with an interest in banking and financial services in sub-Sahara Africa. The Vine Capital consortium is made up of local and international firms.
Another African business news organisation BusinessDay said that Vine Capital consortium is seeking 55 per cent of Afribank. It added that the Vine Capital consortium was picked as a preferred bidder last November.
BusinessDay added that the private investment firm has standing commitments from select international investors, including Emerging Capital Partners and Parish Capital, and it is partnering with Cosmos Bank of Taiwan and Yes Bank of India. The firm’s principals apparently include Goldman Sachs, Merrill Lynch, Deutsche Bank and UBS, and have niche knowledge and experience in markets of Nigeria and the rest of Africa.
The report also added that Yes Bank has the role of replicating Gartner Enterprise Architecture framework, risk management, corporate governance, operations and service delivery, among others, for the consortium. PineBridge (formerly AIG Investments) is also believed to be a financial partner in the consortium.
The development comes two years after the Central Bank of Nigeria forced the heads of a third of Nigeria’s 24 banks, following a severe debt crisis. It bailed out many banks including Afribank with funds. The central bank also created the Asset Management Corp. of Nigeria to buy bad debts from the lenders and recapitalise the rescued banks, before matching them with potential buyers.
Afribank now awaits regulatory approval before it can go ahead with the deal with Vine Capital and others.