British investor CDC Group exits investment in Ugandan bank, sells stake to Danish entity

UGANDADevelopment Finance Company of Uganda Bank Limited, is a commercial bank has confirmed that Britain’s Commonwealth Development Corporation (CDC) Group sold 74,580,276 shares which make up 9.97 per cent of the total 748, 144,033 ordinary shares.

The shareholding is being sold to Investment Fund for Development Countries (IFU) owned by the Danish Government.

CDC made its first investment in DFCU in 1964 as a founding partner to the bank and has played an integral role in its long-term growth over the last six decades, through a number of equity and debt funding rounds.

In that period DFCU has grown to become a major player in the Ugandan banking sector, a champion of SMEs and a committed supporter of financial inclusion and female entrepreneurship through a Women in Business programme created by CDC.

CDC’s Chief Executive, Nick O’Donohoe said their partnership with DFCU has perfectly demonstrated their credentials as a provider of patient capital.

“And I am delighted that in IFU, we are passing the baton to a like-minded investor that, alongside Arise, the largest existing shareholder in DFCU, will be as equally committed to DFCU’s long-term stability and success,” said O’Donohoe.

“DFCU is now a stalwart of the Ugandan economy so we felt it was the appropriate time to deploy our capital elsewhere.

“Uganda is an incredibly important country for CDC and we look forward to the opportunity to reinvest the proceeds from the sale of our DFCU stake into other businesses here,” he added.

CDC has been reducing its stake in DFCU over the last six years – from 60% to 15% in 2013 and then to just under 10% in 2017 following a rights issue at the bank.

IFU´s Chief Executive Officer, Torben Huss said they are pleased to become a shareholder in DFCU as they share the ambition to expand access to financial services, which will lead to productive investments, the creation of decent jobs and improve people’s welfare.

“Moreover, we see this acquisition as a strategic step to increase our engagement in the private sector in Uganda and further promote the Sustainable Development Goals.”

Elly Karuhanga, the Board Chairman of DFCU Limited expressed their appreciation to CDC for the support throughout the last 55 years.

Ever since its first investment in Uganda in 1949, CDC has been a committed supporter of the country’s private sector and will remain so after its exit from DFCU.

CDC is actively looking for new investment opportunities in the country to build upon its US$120 million portfolio of 35 businesses.

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.

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