HFC takeover bid likely to succeed – Republic Bank

Republic Bank Limited says it is likely to acquire the minimum 50.1 per cent stake necessary for the takeover of HFC Bank come the end of the offer period on May 7.

The Bank said its hope is based on significant positive investor feedback on the offer.

Speaking at a media briefing on Wednesday, Ms Jacqueline Quamina, Group General Counsel, Republic Bank said the successful execution of the mandatory takeover offer would enhance the bank’s long-term objective of building a strong bank that is able to compete with peers.

It will also stand the bank in good position to contribute positively to the Ghanaian economy.

“HFC bank will remain largely a Ghanaian bank and what we can do is to make it stronger,” she told the financial press in Accra.

Republic Bank is offering GH¢1.60 to shareholders of HFC bank under the mandatory takeover in order to assume full control of the bank after the Securities and Exchange Commission (SEC) approved the takeover offer documents.

Republic Bank currently holds a 40 per cent stake in the Ghanaian bank.

Republic Bank in 2012 purchased 8.79 per cent shares in HFC Bank Ghana when HFC floated more than 112.4 million ordinary shares under a private placement.

The bank later increased its stake to 32.02 per cent after it bought 23.23 per cent additional shares from Aureos Africa Fund LLC.

In June 2013, Republic Bank further acquired more than 68.85 million ordinary shares at no par value in HFC Bank Ghana Limited from Aureos Africa Fund LLC.

It also purchased 7.98 per cent additional shares in 2013 from Union Bank of Nigeria, increasing its shareholding in the bank to the current 40 per cent.

Ms Quamina said in line with its strategic plan, Republic Bank would continue to work with the local board and bank management to ensure continuity and growth in the business and put the bank in position to undertake big ticket deals.

She said the bank would also leverage on its experiences in the other markets in which it operates to bring best practices and expertise to bear on its operations in Ghana.

“We believe in local expertise and we are very committed to the region and our presence would be to help enhance HFC mortgage business, grow the credit card business as well as provide support for the small and medium scale enterprises in the energy sector,” Ms Quamina said.

Ms Quamina said the Bank has confidence in Ghana and its acquisition is part of a broader sub-Saharan African strategy with the ultimate goal to create a sub-Saharan African bank that will be headquartered in Ghana.

She said the bank has adequate expertise in the oil and gas industry and is ready to bring to bear in Ghana’s oil and gas industry.

The expertise she said would help some players in the Ghana’s oil and gas industry fully participate in the market.

“The bank also has customers who are willing to come and invest in Ghana’s energy sector,” she said.

Mr Elkin Pianim of Serengeti Capital, the transaction advisors, said Republic Bank’s model is to be the controlling shareholder with significant local shareholding.

He said the rationale for the GH? 1.60 offer price was to cross the 50 per cent mark comfortably and underscored the long-term commitment of the bank to the market.

Mr Pianim said the offer is compelling on historical, sector valuation basis and in comparison with other alternatives and added that it would take years of robust operating results to justify the GH? 1.60 offer price.