CDC, Britain’s oldest Development Finance Institution has announced it is quitting its business partnership with the Development Finance Company of Uganda.
CDC owns 9.97 per cent of DFCU
CDC on June 14, 2018, wrote to the DFCU’s board, indicating its intent to sell its stake. According to sources, exist of CDC is more connected to the way Crane Bank was acquired. It is said that after Crane Bank Limited shareholders protesting the takeover of branches by DFCU, it unsettled the board after CBL insisted that branches weren’t part of the bank as they fall under Meera Investment. CDC and other two partners opposed the deal and accused DFCU bosses especially Juma Kisaame for not carrying out enough due diligence.
Accordingly, CDC’s Investment Director in charge of Financial Institutions, Irina Grigorenko, said it was “undertaking a review of its investment in DFCU Limited which may lead to the disposal or some of some or all of its shares in DFCU over the short to medium term.”
CDC said in its letter to DFCU that with the knowledge of the company and Arise B.V., “we have held preliminary discussions with a small number of potential investors” which include Cranemere Africa Limited and responsAbility Investments AG.
Cranemere is a holding company for outstanding businesses in the United States and Europe. Its shareholders are major families and institutions from the United States, Europe, the United Kingdom, Latin America, and the Middle East.
Cranemere’s chairman and founder is Vincent Mai who previously led AEA Investors, a private equity firm founded to make investments on behalf of Rockefeller, Mellon, and Harriman families.
The company’s CEO is Jeffrey Zients who previously served in Barack Obama’s government as the acting director of the Office of Management and Budget.
On the other hand, responsAbility Investments AG describes itself as an asset manager in the field of development investments and offers professionally-managed investment solutions to private, institutional and public investors.
A private Swiss enterprise, founded in 2003 and headquartered in Zurich, responsibility says its investment solutions supply debt and equity financing predominantly to non-listed firms in emerging and developing economies.
DFCU is accused of conniving with some top Bank of Uganda executives to takeover CBL at a throw away price and this has resulted into legal battles as CBL shareholders insist that the transaction wasn’t transparent.
dfcu financial analysis
The bank’s total assets increased to a record Shs3 trillion, up from Shs1.7 trillion in 2016, like explained the boost in assets was a result of the acquisition of its rival Crane Bank. There is a pending case in court where former owners of Crane Bank are seeking recovery of assets, more so fixed assets.
The statement shows that DFCU’s core capital increased to Shs362 billion in 2017, up from Shs188 billion in 2016.
The management has earmarked Shs51 billion for dividends compared to Shs18.5 billion in 2016, meaning each shareholder will more cash on account.
So who are the shareholders? Dfcu is partly owned by the Commonwealth Development Corporation (CDC) a British government-owned company, together with other foreign firms like Rabo Development from the Netherlands and NorFinance from Norway who are shareholders in Arise B.V together with Norfund, a Norwegian government owned Private Equity firm and FMO, the Dutch Development Bank.
BoU transferred the liabilities (including deposits) of Crane Bank to DFCU Bank in 2017.
The leaked agreement between Bank of Uganda and DFCU indicated that the external owned bank got Crane Bank with assets valued at Shs1.3 trillion for just Shs200 billion (payment for liabilities).
The Agreement did not state the amounts of money paid by DFCU as a net purchase price; or the payment terms for monies, or the assets (outside branches) that DFCU was taking over.
DFCU Shareholding percentages
Arise BV 58.71 per cent
CDC Group of the United Kingdom 9.97 per cent
National Social Security Fund (Uganda) 7.69 per cent
Kimberlite Frontier Africa Naster Fund 6.15 per cent
2 undisclosed Institutional Investors 3.22 per cent
SSB-Conrad N. Hilton Foundation 0.98 per cent
Vanderbilt University 0.87 per cent
Blakeney Management 0.63 per cent
Retail investors 11.19 per cent
BoU staff retirement benefit scheme is 0.59 per cent