KENYA – Branch International Limited, personal finance app that provides access to instant loans, has acquired a majority stake in the Century Microfinance Bank Limited (Century MFB).
Branch International, a mobile loans entity, is acquiring a sizeable stake (84.89% of issued share capital) in Century Microfinance Bank- a firm whose balance sheet size is about KSh350 million (US$3.08m).
In April 2021, the Competition Authority authorised the acquisition deal on condition that Branch International and Century Microfinance Bank will each maintain the terms agreed with borrowers in respect of all loans existing in their loan books at the time of the acquisition.
The other condition was that both firms will each retain their existing performing and non-performing loans in accordance with their terms up to and until expiry of such loans so long as the said terms are not in contravention of provisions of the Competition Act No.12 of 2010.
This is the first buy-out of a mainstream lender by a digital lender in the country as the new digital lending law kicks in.
In December, President Uhuru Kenyatta signed into law the Central Bank Amendment Bill 2021 which brought digital lenders under CBK’s control.
In a legal notice dated 24th January 2022 and signed by Treasury CS Ukur Yatani, Branch International Limited has been exempted from provisions of section 19(1) of the Microfinance Act for a period of four years from January 1st, 2022, until 31st December 2025 in connection with the acquisition and direct or indirect holding of ordinary shares in Century Microfinance Bank Limited.
Section 19 bars any individual from holding more than 25% stake in a microfinance institution.
Branch International, a fintech startup that assesses creditworthiness using smartphone data, has more than 3 million customers and more than 15 million loans issued in Kenya, Nigeria, Tanzania, Mexico, and India.
Applying machine learning, Branch International has created an algorithmic approach to determine credit worthiness via customers’ smartphones.
While this tech-forward approach requires transparency and trust, it also enables a fair, secure and convenient path for customers to build capital and save for the future.
Branch International is working to expand access to credit in countries where the average middle-class borrower might not have a credit history or even a bank account.