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Lonrho to Acquire 51% Stake and Control of Mozambican Microfinance Bank, Socremo Banco de Microfinancas

Written by: David Satterthwaite

Article Overview: Lonrho, the British conglomerate that is rapidly growing a portfolio of investments in Africa, has announced that it has signed a letter of intent to acquire 51% and board control of the second largest bank in Mozambique, Socremo Banco de Microfinancas (Socremo). The transaction is subject to Reserve Bank of Mozambique approval.

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Lonrho to Acquire 51% Stake and Control of Mozambican Microfinance Bank, Socremo Banco de Microfinancas

Lonrho, the British conglomerate that is rapidly growing a portfolio of investments in Africa, has announced that it has signed a letter of intent to acquire 51% and board control of the second largest bank in Mozambique, Socremo Banco de Microfinancas (Socremo). The transaction is subject to Reserve Bank of Mozambique approval.

Socremo was founded in 1998 as a ‘non-bank financial intermediary’, and in May 2004 obtained a license to become a microfinance bank. According to the MixMarket, as at 31.12.06, it had total assets worth USD 13.5 million, a debt / equity ratio of 274% and a return on assets of -2.0%. It has 30,000 customers and, according to Lonrho, the number of accounts at the bank has grown 160% during the past year, leading to an increase in its credit portfolio of 103%.

To achieve its takeover, Lonrho has agreed to buy out a number of smaller shareholders. Those who will remain alongside Lonrho are AfriCap Microfinance Fund, the Dakar-based USD 15 million equity investment fund dedicated to the microfinance industry in Africa, with a 21% holding; Gabinete de Consultoria e Apoio a Pequena Industria (GAPI), a local development financial institution for small and medium enterprises, with 11%; and Nordic MicroCap, a Swedish microfinance fund, with 10%. The remainder of the equity will be held in Socremo’s Treasury.

According to AfriCap Microfinance Fund, Socremo is seeking further equity capital so it can meet the USD 3 million minimum regulatory capital required for it to become a commercial bank, which would allow it to offer additional financial services.

Lonrho has a historic interest in Africa, as it was founded as the London and Rhodesian Mining Company in 1909. After demerging its mining business in 1990s, it is now re-investing heavily in Africa with focus on a broad range of industries ranging from primary infrastructure to transportation, support services, hotels, leisure and natural resources.

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Home > African-Accounts > David Satterthwaite > Lonrho to Acquire 51 Stake and Control of Mozambican Microfinance Bank Socremo Banco de Microfinancas
Article Tags: conglomerate, credit portfolio, dakar, debt equity ratio, equity capital, equity investment, financial institution, investment fund, letter of intent, local development, lonrho, microfinance industry, mining company, mixmarket, nordic, pequena industria, regulatory capital, return on assets, small and medium enterprises, transportation support services

About the Author: David Satterthwaite
RSS for David's articles - Visit David's website

David brings 10 years of experience in microfinance management, social entrepreneurship, non-profit management/fund-raising and microfinance investment research. David is the Chairman and President of Prisma Microfinance, Inc., a retail “microbank” operating in Central America. He is also Chief Editor of MicroCapital.org, a news and information service for the microfinance community and its investors. Each month, MicroCapital.org publishes the MicroCapital Monitor, the leading industry newspaper. David writes and speaks frequently on microfinance. He has been a quest speaker at many events, including: Microcredit Summit 5+: Panel on Private Investment, Milken Institute Global Conference, United Nations Year of Microcredit Symposium for Wall Street, Chicago Conference on Microfinance, Harvard Social Enterprise Conference, Dartmouth’s Business Sustainability Conference, Wharton’s Conference on Social Entrepreneurship, Stanford’s Social Enterprise Club, Columbia’s Social Enterprise Program and the Net Impact Annual Conference. Through his work with Prisma and MicroCapital, he has been featured or quoted in The Wall Street Journal, the Boston Globe, “All Things Considered,” Reuters and SocialFunds.com. David has been recognized with the Compaq Computer Corporation Leadership Award, the City Year Inspiring Leader Award and the National Social Venture Business Plan Competition award for Best Social Impact Analysis. David has supported many non-profit and for-profit social enterprises in different capacities, including Access Technology Learning Center, Agora Partnerships, Bridges to Business, City Year, Fonkoze, Kiva and National Social Venture Competition. David holds a B.A. with Honors in Political Science from Haverford College.

Click here to visit David's website
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