Dfcu head office

Eagle Online yesterday published an article saying that UK’s Commonwealth Development Corporation (CDC) Group had identified the buyer for its 9.97 per cent shares in Dfcu bank. That buyer has now been revealed as IFU- Denmark, the Danish Development Finance Institution/ Investment Fund for Developing Countries.

Yesterday dfcu published a cautionary announcement dated December 13, 2019 informing its shareholders and potential investors of the transaction now awaiting the approval of authorities in the financial sector, particularly the Capital Markets Authority which regulates the Uganda Securities Exchange on which Dfcu is listed .

“Dfcu limited…advises its shareholders and the general public that a significant minority shareholder has received and accepted an expression of interest for the purchase of its shareholding in the Company by another,” Dfcu said in a recent cautionary announcement,” Dfcu said in the statement.

But the transaction, according to the announcement, remains subject to obtainment of regulatory approvals and satisfaction of all conditions precedent.

Due to expected sell of shares by the unnamed minority shareholder, the company has therefore advised shareholders and potential investors to be cautions when transacting in the company’s shares. “Shareholders and potential investors are advised to exercise caution when dealing in the Company’s shares until a further announcement is made,” the announcement reads in part.

Eagle Online last year reported that UK’s Commonwealth Development Corporation (CDC) Group was looking for another offshore company to buy its shares in Dfcu. The company owns 9.97 per cent. CDC’s Investment Director Irina Grigorenko wrote a confidential letter to Dfcu Chairman Elly Karuhanga of CDC Group’s intention to sell some or all of its shares.

Grigorenko, said then that CDC Group 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.”

In its letter, CDC also expressed hope that Dfcu would continue to “succeed with the support of Arise B.V., its major shareholder.” CDC’s investment in Dfcu, according to the institution’s official website, is $15.1m (equity) and $10m (subordinated loan).

About nine institutional investors own Dfcu, with Arise BV holding the largest shareholding at 59 per cent. CDC is in second position, followed by National Social Security Fund (NSSF). Months ago, Arise BV Executive Director Deepak Malik resigned from the Dfcu bank’s board of directors.

When asked, analysts said it is normal for shareholders to sell their shares within or get buyers from outside when they think it is the right time to exit. However, he hastened to add that some shareholders exit when they anticipate that the company’s business in future might not be profitable at the level they want it.

However, the latest announcement that a significant minority shareholder has got the buyer of its shares comes at the time when dfcu is facing challenges following the controversial acquisition of Crane Bank Limited (CBL) in January 2017. Dfcu is the holding company of Dfcu bank which bought CBL as offered to it by the Bank of Uganda (BoU).

Recently Dfcu bank realised that it could not take up freehold properties of Meera Investments Limited which had been leased to defunct CBL. Dfcu now wants BoU to compensate it for the loss of the properties it values at Shs47 billion even though it is understood it valued the same properties at Sh10 billion when it took over CBL an estimated Shs200 billion.

About IFU

Rune Norgaard, IFU’s Communication Director, says the institution, an independent government agency provides risk capital and advice to companies wishing to set up business in Africa, Asia, Latin America and parts of Europe. Investments are made on commercial terms in the form of equity and loans. The purpose is to contribute to economic and social development in the investment countries.

IFU and IFU managed funds have co-invested in close to 1300 companies in 100 countries in Africa, Asia, Latin America and parts of Europe.

Key shareholders in Dfcu

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

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