Kagiso Tiso Holdings invests in Ghana

26 February 2014
Kagiso Tiso Holdings Proprietary Limited (“KTH”) is pleased to announce the formal signing of a minority equity investment in Fidelity Bank Ghana Limited (“Fidelity” or the “Bank”). In addition to the equity investment, KTH has also subscribed for convertible preference shares, which upon conversion will increase its stake over time. KTH’s total investment in Fidelity is approximately USD 35 million, through the combined instruments. KTH is investing alongside Amethis Finance and Edmond de Rothschild Europportunities II. The investment is subject to the approval of the Bank of Ghana and completion of conditions precedent.

KTH is South Africa’s pre-eminent black owned and managed investment holding company and boasts a diverse investment portfolio with stakes in market-leading companies across key sectors, including media and ICT, financial services, resources, power and industrials. The group has an asset value of approximately ZAR 10 billion, a solid track record of investment performance and has demonstrated an ability to create long term shareholder value through its superior capital allocation skills.

Following the recent completion of a ZAR 1.9 billion buy out of the minorities in its Kagiso Media subsidiary, KTH announced its ambition to diversify its portfolio into fast growing markets, particularly in West and East Africa and has set aside substantial funds to pursue this strategy. The Fidelity transaction represents a significant milestone for KTH and is its first direct investment outside of South Africa.

Fidelity was created in 1998 as a discount house to provide investment products and services to both private and institutional customers. Fidelity Bank was issued with a universal banking license in 2006, with the ambition to create a world class commercial bank. The Bank has grown at three times the industry average and is now seen as one of the strongest indigenous banks in the industry, with a network of 50 branches across Ghana. Fidelity is the 6th largest bank in the country by customer deposits.

Commenting on the transaction, KTH’s Chief Investment Officer, Jacob Hinson, said “This transaction is in line with our strategy and is testament to our focus on building our portfolio through investing in fast growing regions and sectors. Fidelity Bank Ghana has an excellent management team, significant growth potential and a clear strategy to become a world-class local bank. We are very pleased to be partnering with Fidelity Bank on our first investment outside South Africa, and are eagerly exploring others.”

Hinson further noted “We expect KTH’s investment in Fidelity to create opportunities for our South African portfolio companies, through greater access to the fast growing Ghanaian market. Similarly, for Fidelity this opens channels for access to South African firms as customers and South African financial institutions as partners.”

Edward Effah, Managing Director of Fidelity Bank Ghana said “KTH’s investment is a vote of confidence in the Board and Management of the Bank. Our strategy is to prudently grow our asset base and become a leading bank in Ghana. We welcome KTH’s investment which will allow us to continue to drive our strategy, and in addition to have access to South African markets.”

This investment confirms KTH’s long term investment horizon as well as its confidence in Fidelity’s sound fundamentals. “This transaction signals an important milestone for KTH and in particular the development of our pan-African strategy. We are delighted to have entered into a long term partnership with Fidelity Bank”, noted KTH’s Chief Executive Officer, Vuyisa Nkonyeni.

Upon completion of the transaction, KTH will join the Fidelity Bank Board of Directors. Fidelity and KTH expect to conclude the transaction by April 2014.

Fidelity Bank engaged Fidelity Securities Limited and IC Securities (Ghana) Limited as transaction advisors, and Bentsi-Enchill, Letsa & Ankomah as legal advisors, while KTH engaged Reindorf Chambers as legal advisors.