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LOLC Mauritius acquires majority stake in Key Microfinance Bank Plc

KENYA – LOLC Mauritius, a firm organised under Mauritius laws and owned by LOLC Holdings, Sri Lanka’s second largest publicly traded company by revenue, has received regulatory approval to acquire a 73.2 percent stake in Key Microfinance Bank Plc.

The lender, which formerly traded as Remu, is selling shares to the multinational at a cost of KSh237 million (US$2.09m).

Finance cabinet Secretary Ukur Yatani gazetted the multinational’s exemption from sections of the Microfinance Act that places a 25 per cent ownership limit in microlenders.

“The CS for the National Treasury and Planning exempts LOLC Mauritius from the provisions of section 19(1) of the Act for a period of four years from the 1st of January 2022,” said CS Yatani in gazette notice.

LOLC Mauritius is a subsidiary of the Sri Lankan firm. The exemption is effective from January 1, 2022, and runs until December 31, 2025, after which the multinational will need to reduce its stake or seek an extension of the exemption.

Documents sent to shareholders for approval show the firm is targeting a 73.29 per cent stake in the microlender in what will make it the anchor owner and cutting Fusion Capital’s stake to 6.1 per cent.

LOLC is buying 31.4 million shares at a price of KSh7.54 (US$0.066) each, valuing the transaction at KSh237.4 million (US$2.09m).

The multinational is expected to help Key Microfinance revamp its core banking system to improve efficiency to compete in a tight micro-lending environment.

It will also help link Key Microfinance to global capital through multilateral funding partners ranging from development funding institutions to commercial banks at favourable terms.

Investor interest in Kenya’s financial market has increased over the recent past on resilience of the lenders that have survived the coronavirus pandemic despite challenges of bad loans.

Microfinance institutions mainly lend to individuals and small and medium-sized businesses.

The Sri Lankan financial service firm has been mulling expanding operations into Kenya as it seeks to tap the rising demand for microcredit.

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