KENYA – The International Finance Corporation (IFC), a member of the World Bank Group, and the IFC Financial Institutions Growth Fund has acquired a 6.71% stake in financial service company Equity Group, becoming the second-largest shareholder after Arise BV of Norway and Netherlands.
The acquisition was revealed during a partnership agreement which will see IFC inject KSh19 billion (US$165 million) towards Equity’s program that seeks to finance at least 5 million MSMEs and 25 million households, thereby creating 50 million direct and indirect jobs in Kenya, DRC, Uganda, Rwanda, Tanzania, and South Sudan.
Through this equity investment, Equity Group commits to zero lending for coal-related projects such as the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal.
Also in infrastructure assets exclusively dedicated to support coal mines and coal transportation, or any utility company that generates more than 20% of energy or revenues from coal, or have an annual coal production of 10 million tons or more; or have an installed coal-fired capacity of 5,000MW or more.
“As Equity Group, we are delighted to welcome IFC, a member of the World Bank Group, to the Equity family as our second largest shareholder,” James Mwangi, Managing Director and CEO, Equity Group said.
“With IFC’s reach as the largest global development institution focused on the private sector equity, we will be able to further advance economic development by empowering and catalyzing the transformation of the lives and livelihoods of the African people and will enhance the success and sustainability of Equity’s ‘Africa Recovery and Resilience Plan’.”
Further, Equity Group has agreed to allocate US$80 million equity towards climate-related interventions covering all subsidiaries over the next 5 years.
The credit facility of US$165 million includes US$50 million from IFC, US$50 million from British International Investment (BII), US$65 million from Symbiotic, Responsibility and FMO, the Dutch entrepreneurial development bank, and a long-time shareholder in Equity through Arise Investments.
“Supporting small businesses and climate-friendly projects is central to IFC’s strategy in Africa to help create jobs, respond to climate change and leverage the opportunities afforded by the digital economy,” Mohamed Gouled, Vice President of Risk and Finance, IFC said.
“IFC’s deepening partnership with Equity Group reflects that strategy and will support economic growth in Africa as the continent recovers from the effects of the COVID-19 pandemic.”
The investment is IFC’s first in Africa that aligns with the corporation’s approach to increasing green equity investments in financial institutions.
“BII is pleased to partner with IFC in providing a new loan facility to Equity Bank Kenya. As our second investment in Equity Bank, this investment will further increase working capital to more local businesses and help to fund climate eligible projects in Kenya,” Seema Dhanani, Head of Office Kenya & Coverage Director, East Africa, BII said.
“This climate finance facility demonstrates BII’s ambition to scale climate finance across the African continent and our ongoing commitment to support sustainable, productive, and inclusive economic growth in Kenya.”
This is the second facility which IFC has entered into with Equity Group Holdings in the past year, with the first being a US$50 million loan to Equity BCDC (Equity’s subsidiary in the DRC) in Congolese francs that is helping the bank to provide additional local currency loans to underserved micro, small and medium-sized businesses in the DRC.
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