Arise B.V, a leading equity investor in Africa, has made an Additional Tier 1 (AT1) investment of about $75 million in Ecobank Transnational Incorporated (ETI), the Togo-based parent company of Ecobank Group.

A statement from ETI reveals that the AT1 instrument is the first to be issued by Ecobank, adding that Arise’s investment is Basel III-compliant. 

Basel III is an international regulatory accord rolled out by the Basel Committee, which introduced a set of reforms intended to minimise risk and promote stability in the international financial system. Developed in response to the 2007-2009 financial crisis, it requires banks to maintain proper debt ratios and keep certain levels of reserve capital on hand.

The investment, described as a “landmark transaction” in sub-Saharan Africa (SSA), will help Ecobank optimise and improve its Tier-1 capital by $75 million, the company said. 

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Ecobank plans to deploy the additional investment to meet its general corporate obligations, which include loan growth and strengthening the reserves of profitable subsidiaries in two of its major markets – Francophone West Africa and Anglophone West Africa.

ETI recently issued a $350 million subordinated Sustainability Eurobond in June, which was reportedly well-received by international investors and is now listed on the London Stock Exchange (LSE) as Tier 2 capital.

According to Ade Adeyemi, Group Chief Executive Officer of ETI, the fresh investment by Arise is a “testament to continued support and confidence” from Ecobank’s shareholders. 

Arise B.V became one of ETI’s existing major institutional shareholders after it bought a 14% stake in the banking group from the International Finance Corporation (IFC) and the funds managed by the IFC Asset Management Company (AMC) back in 2019.

Arise has equity investments in several financial institutions in sub-Saharan Africa, and currently manages assets in excess of $960 million in over 10 African countries. 

The investment firm has indirect banking exposure to over 33 countries in the region with ETI its primary banking investment in Francophone and Anglophone West Africa.

Adeyemi adds that the investment, in addition to improving Ecobank’s double leverage ratio, is also a “good boost” for the firm and its staff.

“We are very supportive of ETI’s growth ambitions and its ability to increase financial services to Agri, SMEs & retail customers,” Arise CEO Deepak Malik said. “Our investment will also strengthen the balance sheet of ETI and provide additional risk capital.”

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Michael Ajifowoke | Author

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