Fusion Capital has completed buying a 25% 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 USD 1million to 5million targeting this segment.
Fusion 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 8 regulated microfinance banks in Kenya. The banking sector in Kenya as a whole has seen 10+ years of rapid growth as institutions have aggressively moved to bring people who were previously excluded to using banking services. It is estimated that over 30% 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 “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 comments: “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”.