Republic Bank Ltd, the largest bank in the Caribbean, says it is hopeful of a positive response from shareholders of HFC Bank that will enable it to increase its stakeholding in the local bank beyond 50 per cent.
Republic Bank entered the Ghanaian market a couple of years ago, with about 20 per cent investment in HFC Bank, the country’s mortgage-biased universal bank, but has since increased its stake to a total of 42 per cent, including a two per cent convertible note.
The Caribbean bank’s substantial interest in HFC Bank permits it to make a Mandatory Takeover bid to shareholders of the local bank. Republic Bank is, therefore, offering shareholders of HFC Bank a price of GH¢1.60 for every share for them to surrender their shares to it.
“We hope that people will take up the offer and allow us to become part of the financial sector of Ghana. We are very optimistic that shareholders will do the analyses, consult their financial advisors and make the correct decisions,” the Group General Counsel of RPL, Ms Jacqueline Quamina, told a section of the press in Accra.
The offer is 18 per cent more than the GH¢1.33 per share it closed trading on March 20, the time the offer price was determined. The offer closes on Thursday, May 7, 2015, which is 30 working days from the submission by Republic Bank to HFC Bank of the offer document on Tuesday, March 24, 2015.
Mr Elkin Pianim of Serengeti Capital, sponsoring brokers of the Mandatory Tender Offer (MTO), believes that existing shareholders would be better off accepting the GH¢1.60 offer which he described as a compelling offer because it was an opportunity that would not present itself again after the May 7 deadline.
RBL wants to hold controlling interest (50+1) per cent shares in HFC Bank to enable it to introduce progressive changes that would further expand the bank in the country.
For the long term, however, Ms Quamina said its interest could go to 75 per cent, but not above.
The bank is essentially about eight percentage stake shy of capturing a controlling interest in HFC Bank. The local bank’s shareholders are mostly institutional investors, such as Ghana Cocoa Board (COCOBOD), the Social Security and National Insurance Trust (SSNIT) and SIC Insurance.
The Group General Counsel of Republic Bank said taking controlling interest in HFC Bank would not mean downsizing or imposing its people on the local enterprise, adding: “We believe in using strong local boards and local people.”
The bank, she said, had a lot of expertise in mortgage financing, oil and gas financing, corporate and retail banking which it would bring on board and further help to deepen the Ghanaian financial services industry. It would also build the capacity of HFC Bank staff and further expand its footprint across the country, which would be an opportunity for more employment, rather than downsizing.
Republic Bank first purchased HFC Bank shares in 2012 when the share price was hovering around GH¢0.45 per share, but the shares have since climbed to GH¢1.55 as of April 14.
Republic Bank is one of the largest independent commercial banks in English-speaking Caribbean and has been trading for over 176 years.
The bank, which also has mastery in mortgage financing and retail banking, has assets valued at $9.4 billion, as of September last year.
HFC Bank, on the other hand, is a strong Ghanaian bank with robust balance sheet and has been prudently managed over the years, a sterling quality that its foreign partner believes it could leverage to create a larger tier-one banking entity.