IFC acquires 7% of Equity Bank; the partnership to finance 5m businesses, create 50 million jobs

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The International Finance Corporation (IFC), the private sector lending arm of the World Bank, has acquired a 7 percent stake in Kenya’s regional lender Equity Bank.
Mohamed Gouled, the vice president of risk and finance at the IFC, said in Nairobi, the Kenyan capital, that the investment makes the financial institution the second-largest shareholder of Equity Bank.
“The investment is IFC’s first in Africa that aligns with the corporation’s approach to increase green equity investments in financial institutions,” Gouled said.

Equity Bank has operations in Kenya, Uganda, Tanzania, Rwanda, the Democratic Republic of the Congo and South Sudan as well as a commercial representative office in Ethiopia.
Gouled noted that the sale agreement requires Equity Bank to commit to zero lending for coal-related projects including the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal or infrastructure assets exclusively dedicated to supporting coal mines and coal transportation.

IFC’s backing, along with that of partners British International Investment, FMO, Symbiotics and ResponsAbility, will support Equity Group to deliver on its $6 billion `Africa Recovery and Resilience Plan’ to finance five million businesses and 25 million households to create 50 million jobs both directly and indirectly in Kenya, DRC, Uganda, Rwanda, Tanzania, and South Sudan.
The backing is underpinned by:
IFC and the IFC Financial Institutions Growth Fund, a fund managed by IFC Asset Management Company, IFC’s equity mobilization division, acquired a 6.71 percent stake in Equity Group, East Africa’s largest banking group. The investment is IFC’s first in Africa that aligns with IFC’s approach to increase green equity investments in financial institutions. Through this equity investment, Equity Group commits to zero lending for coal related projects. Further, Equity Group Holdings has agreed to allocate $80 million equity towards climate covering all subsidiaries over the next five years.

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As part of IFC and Equity Group’s expanded partnership, IFC, along with partners, is also providing a loan to Equity Bank Kenya to support lending to small and medium-sized enterprises, and will focus especially on supporting climate-smart projects which are developing solutions to help address the climate emergency. The $165 million subordinated loan to Equity Bank Kenya includes $50 million from IFC, $50 million from BII, and $65 million from Symbiotics, ResponsAbIility, and the Dutch entrepreneurial development bank, FMO, a long-time shareholder in Equity through Arise Investments.
“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. 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’,” said Dr. James Mwangi, Equity Group Managing Director and CEO.

“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. 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,” said Mohamed Gouled, IFC’s Vice President of Risk and Finance.

“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. This climate finance facility demonstrates BII’s ambition to scale climate finance across the African continent and our ongoing commitment to support sustainable, productiveproductive, and inclusive economic growth in Kenya,” said Seema Dhanani, Head of Office Kenya & Coverage Director, East Africa, BII.

This is the second facility which IFC has entered into with Equity Group Holdings in the past year, with the first being a $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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