Digital lender Branch seeks majority stake in Century micro-bank

Digital lender Branch International Limited has sought a majority stake in Kenya’s micro-finance bank (MFB) Century.

The unprecedented transaction has been disclosed in approvals granted by the Competition Authority of Kenya (CAK) which sets out the conditions for the acquisition.

The digital lender is seeking to take up an 84.9 per cent stake in the bank currently classified as the smallest of micro-lenders in the country.

As part of the conditions set by the competitions regulator, Branch and Century MFB have been directed to maintain the terms agreed with borrowers in respect to existing loans prior to the acquisition.

Further, the pair has been asked to retain their existing performing and non-performing loans (NPLs) in accordance with their terms until their expiry.

The transactions nevertheless remains the subject of further regulatory approvals including the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK).

If successful, the transaction will represent the first buy-out of a mainstream lender by a digital lender in the country.

Branch describes itself as a machine-learning provider of mobile financial services to emerging markets.

Headquarted in San Fransisco California, the fintech founded in 2015 has offices in Lagos, Nairobi, Mumbai and Mexico City.

The digital lender is backed by the World Bank financing arm- the International Finance Corporation (IFC) and Andreesen Horowitz, an investor in social media giant Facebook.

On its part, Century Microfinance Bank specializes in providing financial services to micro, small and medium businesses and has in excess of 26,000 clients.

Century was licensed as a deposit-taking microfinance institution in September 2012 by the CBK.

As of the end of 2019, Century MFB was ranked as the third smallest MFB with a market size of 0.4 per cent and an asset base of Ksh.336 million.