THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you have disposed of all your shares in Equity Bank Limited (the “Company” or the “Bank”) please forward this document and the attached form of proxy to the stockbroker, banker or other agent through whom you disposed of your shares.
If you are currently a shareholder but are unable to attend the extraordinary general meeting (the “EGM”) to be held at 10 a.m. on 21st December, 2007 please complete and return the attached form of proxy in accordance with the instructions printed thereon and send it to Equity Bank Limited, NHIF Building, 14th Floor, P.O. Box 75104-00200, Nairobi.
This Circular is issued by Equity Bank Limited and has been prepared in compliance with the requirements of The Capital Markets Act (Cap. 485A), The Capital Markets (Securities)(Public Offers, Listing and Disclosures) Regulations, 2002 and the Nairobi Stock Exchange Listing Manual, 2002. The Capital Markets Authority (“CMA”) has approved the issue of this Circular, and the transaction described in it, including the increase in authorised share capital of the Company and the issue of 90,516,255 additional new ordinary shares of KES 5/- of the Company (“New Shares”) on the terms described herein. As a matter of policy, neither the Capital Markets Authority nor the Nairobi Stock Exchange Limited (“NSE”) assume any responsibility for the correctness of any statements or opinions made or reports contained in this Circular.
Equity Bank Limited
Incorporated in Kenya under the Companies Act (Cap 486 of the Laws of Kenya) (Registration Number C. 4/2005)
CIRCULAR TO SHAREHOLDERS
Proposals for an allotment of 90,516,255 new ordinary shares
to
Helios EB Investors, L.P.
representing 24.99% of the enlarged issued share capital of the Bank
A Notice of an Extraordinary General Meeting of the Company which is to be held at 10.00 a.m. on 21st December, 2007 in the Amphitheatre of the Kenyatta International Conference Centre (“KICC”), Nairobi, Kenya is set out at the end of this document. A form of proxy for use by shareholders is also enclosed.
Part 1
KEY DATES 2007
Latest time to return proxy forms for the EGM 10.00 a.m. on 19th December, 2007
EGM 10.00 a.m. on 21st December, 2007
Press Announcement of outcome of the EGM 24th December, 2007 Date for admission of the New Shares to Listing 31st December, 2007 The above dates and times are subject to amendment.
TRANSACTION ADVISERS
Transaction Adviser to the Company Legal Adviser to the Company
PricewaterhouseCoopers Limited The Rahimtulla Tower
Upper Hill Road P O Box 43963 – 00100 Nairobi
Kaplan & Stratton, Advocates 9th Floor, Williamson House, 4th Ngong Avenue
P.O. Box 40111 – 00100 Nairobi
Sponsoring Stockbroker Auditor
Standard Investment Bank Limited 16th Floor, ICEA Building Kenyatta Avenue P.O. Box 13714-00800 Nairobi
Ernst & Young
Kenya Re Towers, Upper Hill Off Ragati Road
P.O. Box 44286-00100 Nairobi
DEFINITIONS
The following definitions apply throughout this Circular, unless the context requires otherwise: “Articles of Association” the articles of association of the Company
“Banking Act” the Banking Act (Cap 488) of the Laws of Kenya
“CBK” the Central Bank of Kenya, established under the Central Bank of Kenya Act (Cap 491) of the Laws of Kenya
“CMA” the Capital Markets Authority, established under The Capital Markets Act (Cap 485A) of the Laws of Kenya
“Directors” or “Board” the persons named herein on page 4 as Directors of the Company
“EGM” the extraordinary general meeting of the Company to be held on 21st December, 2007
“Equity Bank”, “Bank” or the
“Company” Equity Bank Limited a public limited liability company (incorporated in Kenya under registration number C4/2005), listed on the NSE and licensed by the CBK as a commercial bank
“Helios EB” Helios EB Investors, L.P., a limited partnership incorporated under the laws of the Cayman Islands under registration number 22273
“Helios” Helios 1 and/or Helios 2
“Helios 1” Helios Investors Genpar, L.P. a limited partnership incorporated under the laws of the Cayman Islands
“Helios 2” Helios Investment Partners, L.L.P. a limited liability partnership registered in England and Wales (registration number OC320980) authorised and regulated in the United Kingdom by the Financial Services Authority “Investment” the proposed subscription by Helios EB for the New Shares
“KES” Kenya Shillings
“Listing” admission of the New Shares to the Official List of the NSE
“New Shares” the 90,516,255 new ordinary shares of KES 5/- each in the Company proposed to be issued fully paid for cash to Helios at a price of KES 122/- per share
“NSE” the Nairobi Stock Exchange
“ordinary shares” the 271,693,650 existing issued and fully paid up ordinary shares of KES 5/- each in the Company
“PoS Regulations” the Capital Markets (Securities)(Public Offers, Listing and Disclosures) Regulations, 2002
PART 2-LETTER FROM THE CHAIRMAN OF EQUITY BANK LIMITED
Equity Bank Limited NHIF Building, 14th Floor P.O. Box 75104-00200 Nairobi, Kenya
Directors:
Peter K. Munga - Chairman
James N. Mwangi – Chief Executive Officer Benson I. Wairegi Frederick Muchoki Linus Gitahi Peter Gachuba Julius Kipng’etich Ernest Nzovu
To all shareholders of Equity Bank Limited
29th November, 2007 Dear Shareholder,
PROPOSED INVESTMENT BY HELIOS EB INVESTORS, L.P. (“HELIOS EB”) TO ACQUIRE 24.99% OF THE
COMPANY
On 14th November, 2007 the Company announced that an agreement had been signed with Helios EB (a limited partnership managed by Helios Investors Genpar, L.P. and advised by Helios Investment Partners LLP), conditional, amongst other things, on shareholder approval and approvals of the CBK and the CMA, to subscribe for 90,516,255 ordinary shares representing 24.99% of the enlarged issued share capital of the Bank at a price of KES 122/- per New Share. The Investment will result in a substantial increase in the shareholders’ funds of the Bank amounting to approximately KES 11 billion and represents a major new development in the future of your Company’s business.
The purpose of this document is to provide you with information on the terms of the Investment, on Helios as the new strategic partner for the Bank and on the positive impact this is expected to have on the Bank’s financial position, its prospects and on its business in general. As required by the Articles of Association and by law, the EGM has been called in order to give you an opportunity to consider and, if thought fit, to approve the Investment, in particular by authorising an increase in the Bank’s authorised share capital and the allotment of 90,516,255 New Shares to Helios EB in return for a cash injection of approximately KES 11 billion.
Regulatory approvals have been obtained from the CMA under the Capital Markets Act pursuant to The Fourth Schedule of the PoS Regulations and from the CBK under the Banking Act. In addition, application has been made to the NSE to list the New Shares on the NSE if the EGM approves the Investment.
BACKGROUND TO AND REASONS FOR THE INVESTMENT
The Bank’s vision is “…to be the preferred microfinance service provider contributing to the economic prosperity of Africa…” and its mission statement is to “To mobilise resources and offer credit to maximise value and economically empower the microfinance clients and other stakeholders by offering customer focused and market led quality financial services”.
The Bank’s strategy is geared towards making banking services accessible to the vast majority of Kenyans who presently do not use or have access to banking services. The Directors believe that the Bank will continue to experience significant growth over the next few years and plans to adopt a growth consolidation strategy with the objective of ensuring that the Bank remains financially sound, strong, and competitive in the provision of products and services. The Bank intends to reinforce its institutional structure by ensuring that financial resources, information technology, human capital, infrastructure and other core resources are at a level needed to respond to both internal and external challenges.
Coupled with the growth consolidation strategy, the Bank proposes to diversify and offer new but complementary services within its current market and expand into the East African and other regional markets in Africa where the Bank is able to replicate its proven business model. This business diversification will be achieved through both acquisitions of existing businesses and organic growth.
Shareholders will be aware from recent announcements issued by the Bank and from the Directors’ Annual Report and Financial Statements for the year ended 31st December, 2006 that significant progress has been made towards achieving these goals. The most recent announcement confirmed that the Company has finalised its acquisition of a 20% shareholding in Housing Finance Company of Kenya Limited at a price of KES 425 million. This acquisition positions the Bank as a strategic investor in the key domestic mortgage market. However, the strong growth in all areas of the Bank’s operations and performance in recent times needs to be underpinned by adequate core capital (shareholder’s funds) and by the highest levels of management and technical expertise. The pace of the Bank’s growth has meant that additional funding is required to further capitalise the Bank and that greater management and technical resources are required to help sustain these recent positive developments. Your Board has carefully considered how best to increase the Bank’s equity capital and strengthen the Bank’s balance sheet, secure funds to support organic growth of the business in Kenya, to finance local and regional expansion and, in addition, to secure the technical and strategic support necessary for the future development of the Bank’s business.
Additional equity capital is required in order to:
• provide funds for local and regional expansion
• provide funds for investment in Kenya’s capital markets and for lending to the Bank’s customer base
• re-balance the debt-to-equity ratios of the Bank’s finances
• ensure continued compliance with CBK regulatory requirements for capital adequacy, while increasing the Bank’s capacity to grow its deposit base further and to increase the maximum loan size that the Bank can offer to its large corporate customers
• provide capital for investment in the Bank’s own operations, such as in information technology systems and human resources skills.
Taking these matters into account, and considering the options available to the Bank to meet the above objectives, your Board has decided that an investment by a respected, well-managed and professional Africa-focused private equity investor is in the best long-term interests of the Bank, its customers and shareholders. Your Board is of the opinion that the Investment by Helios offers an efficient, cost-effective and advantageous means of meeting the requirements of the Bank.
INFORMATION ON HELIOS
Helios, through entities which it manages and advises, is an African investment business making private equity and growth investments exclusively in sub-Saharan Africa. Helios’ principals are Africans with a strong entrepreneurial track-record and sound experience in start-up and growth investments.
Helios manages capital on behalf of a group of investors, comprising multi-lateral organisations, development finance institutions, leading global investment firms, the investment offices of prominent families, high-net-worth individuals, and all of Helios’ own investment professionals. Notable among the investors are:
• U.S. Overseas Private Investment Corporation (“OPIC”)
• International Finance Corporation (“IFC”).
Helios has access to an extensive global network of strategic, operational and financial partners and works actively with senior management in companies in which it has invested, including through its representation on its boards.
Among the major recent investments undertaken by Helios in Africa are:
• a US$ 50 million investment to acquire 16% of First City Monument Bank PLC, a rapidly growing universal bank in Nigeria with over US$ 2 billion in assets
• a US$ 170.5 million investment for a 22% interest in AfricaTel Holdings B.V., a holding company aggregating all of the sub-Saharan Africa telecommunications assets of the Portugal Telecom Group. Further details of these transactions are set out in Part 5 of this Circular which also contains a description of the business, directors, management and major shareholders of Helios and of Helios EB.
KEY BENEFITS OF THE INVESTMENT FOR THE BANK
The Board expects that the investment by Helios will bring the following benefits to the Bank as it strives to meet its objectives:
• the ability to source world-class management and technical skills to support senior levels of the Bank’s management team
• access to strategic, financial and investment advice
• knowledge-sharing on strategic planning, business growth and mergers and acquisitions
• experience of major banking business expansion in Africa
• raise the profile of the Bank internationally
• the support of a skilled, experienced, responsive and dynamic team of investment principals dedicated to active support of the Bank
• a truly Africa–focused business managed mainly by Africans.
THE PRINCIPAL TERMS OF THE INVESTMENT
Helios EB has agreed to subscribe for the New Shares at a price of KES 122/- per ordinary share, making an aggregate investment of KES 11,042,983,110. The price is calculated on the volume-weighted average daily price per ordinary share for each trading day on the NSE for the period 23rd July, 2007 to 22nd October, 2007, both dates inclusive (the latter being the day on which the Board resolved to proceed with more detailed negotiations with Helios). Helios will thus acquire a shareholding of 24.99% in the Company, making it the single largest shareholder in the Bank.
The Investment will be made by Helios EB, which is a limited partnership established by Helios specifically for the purpose of the investment in the Bank. Helios EB is owned by its limited partners and its general partner entities, which entities are managed by Helios 1 and advised by Helios 2.
The New Shares will, when issued, have the same rights and be subject to the same obligations as the existing ordinary shares of the Company save that the New Shares will only be entitled to dividends declared for the financial year ending 31st December, 2008 and beyond. Therefore, should the Board declare and recommend a dividend to shareholders of the Bank for the financial year ending 31st December, 2007 Helios EB will not participate in this dividend.
The terms of the investment are contained in an Investment Agreement dated 14th November, 2007 between Helios EB and the Company (a copy of which is available for inspection by shareholders as noted in paragraph 6 of Part 6 of this Circular) (the “Investment Agreement”). The Investment Agreement provides for:
• Helios to have the right to appoint a number of Directors to the Board broadly proportionate to its shareholding, such directors to be of high repute and standing. Helios will exercise its right initially by nominating two Directors, and may at its discretion subsequently nominate a further director
• Helios to have the right to appoint a proportionate number of representatives to each of the sub-committees of the Board. The sub-sub-committees are: Audit, Risk Management, Credit Systems and Processes, Strategy and Investment, Governance, Board Nomination and Staff Remuneration and Tendering and Procurement
• the Bank to maintain a dividend payout policy of least 40% of annual distributable profits , subject to all applicable legal and regulatory requirements and the funding requirements of the Bank, as determined from time to time by the Board
• the adoption by the Board of a sources and uses business plan for the Bank’s business
• Helios to provide management and technical services support
• the Bank to give appropriate warranties, indemnities and undertakings to Helios EB regarding itself and its business in connection with the Investment.
EFFECT OF THE INVESTMENT ON EXISTING SHAREHOLDERS
As a result of the Investment the issued share capital of the Bank will be increased by 30.33% in order to provide for the issue of the New Shares to Helios EB. Currently, the Bank’s authorised share capital is not sufficient to allow for the increase that is necessary. Therefore, as stated in the notice of EGM it is proposed to seek the approval of shareholders to the increase in the authorised share capital from KES 1,500,000,000 to KES 1,809,249,525, to the allotment of the New Shares to the Helios EB without first offering the New Shares to existing shareholders of the Company and to amend the Bank’s Articles of Association. As a consequence of the Investment, all shareholders’ current shareholdings will be diluted by 24.99%. Your Board considers that the dilutive impact of the increase in issued share capital on earnings per ordinary share will be offset by the incremental earnings anticipated as a result of deploying the approximately KES 11 billion proceeds of the Investment in interest-earning assets in the short-term and further by the strong potential for growth in the Bank’s business that the cash injection will produce in the medium- to long-term once deployed through the Bank’s operations.
Further information on the pro-forma effects of the Investment is set out in Part 3 below.
EXTRAORDINARY GENERAL MEETING
Resolutions to approve the Investment, increase the authorised share capital of the Company, to authorise the issue of the New Shares to Helios EB as well as to amend the Articles of Association of the Bank are set out in the notice of the EGM, which is printed at the end of this document.
A form of proxy for your use in relation to the EGM is enclosed. Whether or not you propose to attend the EGM you are requested to complete the form of proxy in accordance with the instructions printed thereon as soon as possible. The completion and return of a form of proxy will not prevent you from attending and voting in person if you wish to do so. The form of proxy should be returned to the Company Secretary so as to arrive by no later than 10.00 a.m. 19th December, 2007.
RECOMMENDATION
Your Board considers that the Investment will contribute significantly towards enabling the Bank to achieve its objectives, as described above, and that it is in the best long-term interests of the Bank and its shareholders to bring Helios EB in as a shareholder and through this to benefit from the skills and expertise of Helios. Accordingly, the Directors unanimously recommend all shareholders to vote in favour of the resolutions to be proposed at the EGM, as they intend to do in respect of their own beneficial holdings of ordinary shares and/or the beneficial shareholdings of the entities they represent on the Board.
If you are in any doubt as to what action to take you are recommended to seek independent advice from your stockbroker, bank manager, lawyer or other professional adviser.
Yours sincerely, Peter K. Munga
PART 3 - PRO-FORMA FINANCIAL AND SHAREHOLDING INFORMATION
Pro-forma Balance Sheet of the Bank
As set out in the Chairman’s letter, the Investment will result in a substantial positive impact on the financial position of the Bank. To help illustrate the potential impact on your Bank’s financial position, the table below sets out a pro-forma balance sheet of the Bank assuming that the Investment transaction had been completed as at 30th September, 2007 and the Bank had deployed the proceeds in interest-earning operating assets (i.e. Government securities, placements with banks and loans to customers) in the same proportion that existed as at 30th September, 2007 on that date.
In particular, the allotment of the New Shares for cash proceeds of approximately KES 11 billion will mean that reported shareholder’s funds will quadruple from present levels and that reported book net assets per ordinary share will increase to almost KES 39/50 per ordinary share from roughly KES 12/- per share. The level of reported regulatory core capital will also quadruple and your Bank will be amongst the best capitalised banks in the Kenyan market operating at well above the minimum specified regulatory ratios. This in turn will mean that your Bank is able to increase the maximum loan size that it can offer to its largest customers substantially and the Bank will be in position to continue to grow its deposit base.
|---Before---| |---Impact of the Investment---|---After---|
All figures in KES'000
EBL- published balance sheet as at 31 Dec 06 (audited) EBL- published balance sheet as at 30 September 2007 (unaudited) Allotment of New Shares and receipt of cash proceeds Proforma balance-sheet immediately on completion of Investment Assumed deployment of proceeds in bank interest-earning operating assets in same proportion as at 30 September 2007 Proforma balance sheet post-Investment and post-deployment of proceeds in Bank operations ASSETS
Cash and bank balances 2,690,856 4,975,696 -7,453 4,968,243 0 4,968,243 Government securities 1,650,653 4,939,230 0 4,939,230 1,491,559 6,430,789 Placements and balances with other banking institutions 2,022,784 4,978,406 11,042,983 16,021,389 -9,017,966 7,003,423 Loans and advances to customers 10,929,581 16,366,172 0 16,366,172 7,526,407 23,892,579 Property, equipment and leasehold land 1,469,462 2,158,054 0 2,158,054 0 2,158,054
Investment property 11,269 11,269 0 11,269 0 11,269 Intangible assets 161,153 175,738 0 175,738 0 175,738 Other assets 1,088,726 890,329 0 890,329 0 890,329 Deferred tax 0 0 0 0 0 0 Total assets 20,024,484 34,494,894 45,530,424 45,530,424 LIABILITIES Customers' deposits -16,336,729 -26,640,115 0 -26,640,115 0 -26,640,115 Other liabilities -843,364 -1,844,334 0 -1,844,334 0 -1,844,334 Tax payable -147,031 -122,234 0 -122,234 0 -122,234 Borrowings -485,450 -2,632,384 0 -2,632,384 0 -2,632,384 Deferred tax -10,917 -10,918 0 -10,918 0 -10,918 Total liabilities -17,823,491 -31,249,985 -31,249,985 -31,249,985 SHAREHOLDERS' FUNDS Share capital -452,823 -1,358,468 -452,581 -1,811,049 0 -1,811,049 Share premium 0 -10,582,949 -10,582,949 0 -10,582,949 Reserves -1,748,170 -1,886,441 0 -1,886,441 0 -1,886,441
Total Shareholders' funds -2,200,993 -3,244,909 -14,280,439 -14,280,439
TOTAL LIABILITIES AND SHAREHOLDERS' FUNDS -20,024,484 -34,494,894 0 -45,530,424 0 -45,530,424
Key statistics
Number of ordinary shares in issue (number) 90,564,550 271,693,650 362,209,905 362,209,905
Book net assets per share (KES per share) 24.30 11.94 39.43 39.43
Capital strength
Regulatory Core capital (KES'000) 2,200,993 2,632,387 13,667,917 13,667,917 Regulatory Total capital (KES'000) 2,200,993 3,948,581 14,984,111 14,984,111 Core capital as % of risk weighted assets (required minimum 8%) 13.9% 11.6% 54.8% 44.6% Core capital as % of total deposits (required minimum 8%) 13.5% 9.9% 51.3% 51.3% Total capital as % of risk weighted assets (required minimum 12%) 13.9% 17.4% 60.1% 48.9% Lending capacity
Single borrower limit (25% of core capital) (KES'000) 550,248 658,097 3,416,979 3,416,979
Notes
1 Proforma balance sheets have been prepared assuming that transaction had been completed on 30 September 2007 with Equity Bank allotting 90,516,255 shares at a subscription price of KES 122 resulting in gross proceeds of KES 11.04bn of which KES 10.59bn is credited to the share premium account. 2 Estimated costs of the issue of KES 7.5m are deducted from the share premium account.
3 The proforma balance sheet assumes that, firstly, the entire proceeds are placed with local banks and, secondly, that the proceeds are subsequently invested in Bank operating assets in the same proportion of interest-earning assets as existed as at 30 September 2007. In practice, management will deploy the funds raised over the next few years in accordance with its strategic plan and, hence, the Bank's asset allocation will change over time.
Pro-forma profit and loss account
The Chairman’s letter notes that the Board considers that the dilutive impact of the increase in issued share capital on earnings per ordinary share will be offset by the incremental earnings anticipated as a result of deploying the approximately KES 11 billion proceeds of the Investment in interest-earning assets in the short-term, and further, by the strong potential for growth in the Bank’s business that the cash injection will produce once deployed through the Bank’s operations.
To help illustrate the potential impact on the Bank’s earnings, the table below sets out the pro-forma profit and loss statement for the Bank for the 9-month period to 30th September, 2007 under two scenarios. The first scenario assumes that the Investment had been completed on 1st January, 2007 and makes the conservative assumption that the entire proceeds of approximately KES 11 billion had been invested in Kenya Government securities at an annual interest yield of 7.1%. As shown in the table below, this scenario would have resulted in reported earnings per share increasing from approximately KES 4.5 per share to KES 4.7 per share. The second scenario also assumes that the Investment transaction had been completed on 1st January, 2007 but is prepared on the assumption that the Bank had deployed the proceeds at that date in three categories of interest-earning assets i.e. government securities, placements with other banks and loans to customers in the same ratio that existed as at 30th September, 2007. Further, the scenario assumes that these incremental assets resulted in incremental income at the same rate that the Bank earned on similar assets over the period.
|---Scenario 1---| |---Scenario 2---|
All figures in KES'000
EBL published profit and loss statement for the 9 month ended 30 September 2007 (unaudited) Illustrative incremental income assuming proceeds had been invested in Government securities
Post-Investment Proforma Profit and Loss account for the 9-month period ended 30 September 2007
Illustrative incremental income assuming proceeds were reinvested in interest-earning operating assets in same proportion actual asset allocation as at 30 September 2007
Post-Investment Proforma profit and loss account for the 9-month period ended 30 September 2007 Profit and loss account
Interest income 2,287,064 588,039 2,875,103 1,140,655 3,427,719
Interest expense -285,456 0 -285,456 0 -285,456
Net interest income 2,001,608 588,039 2,589,647 1,140,655 3,142,263
Non interest income 2,070,543 0 2,070,543 321,378 2,391,921
Total operating income 4,072,151 588,039 4,660,190 1,462,033 5,534,184
Operating expenses -2,540,843 0 -2,540,843 0 -2,540,843
Profit and loss before tax 1,531,308 588,039 2,119,347 1,462,033 2,993,341
Taxation -306,262 -117,608 -423,870 -292,407 -598,669
Profit after tax 1,225,046 470,431 1,695,477 1,169,626 2,394,672 Key statistics
Number of shares in Issue 271,693,650 362,209,905 362,209,905
Earnings per share ( KES per Share) 4.51 4.68 6.61
Notes
1 Proforma statements have been prepared assuming that the Transaction had been completed and proceeds of KES 11.04bn received on 1 January 2007.
2 Scenario 1: Under this scenario the proforma statement is prepared on the assumptions that the entire proceeds from the transaction were invested in Government securities on 1 January 2007 at an annual interest yield of 7.10% and that this investment was held for the 9 months to 30 September 2007.
3 Scenario 2: Under this scenario the proforma statement is prepared on the assumption that the proceeds of the share issue were invested on 1 January 2007 in interest-earning operating assets (ie Government securities, placements with banks and customer loans) in the same proportion as the actual asset allocation as at actual asset allocation as at 30 September 2007 and that these additional operating assets earned the same aggregate annual effective income yield of 17.7% that the Bank reported earning on similar assets in the 9-month period to 30 September 2007.
The Board cautions shareholders that because of its nature, the pro-forma financial information addresses a hypothetical situation and, therefore, does not represent the company's actual financial position or results. In particular, the Board cautions shareholders that the actual impact on earnings per ordinary share in future financial periods will depend on how the proceeds of the Investment are actually deployed in the Bank’s operations and the yield achieved in that period and actual results could differ materially from those anticipated in the statements above. As set out earlier, the Bank’s asset allocations will alter over time as it implements its strategic plan and, in particular, may include investments in other companies and in property, plant and equipment.
Pro-forma shareholding information
The table below illustrates the pro-forma impact of the Investment on the Bank’s existing shareholders in terms of numbers of ordinary shares they hold and their respective shareholding percentages.
|---Before---| |---After---| Number of shares held as at 30 September 2007 Shareholding percentage as at 30 September 2007 Allotment of New Shares Number of shares held post-Investment Shareholding percentage post-Investment
British American Investments Company (Kenya) Limited 40,081,689 14.75% 40,081,689 11.07%
Nelson Muguku Njoroge 22,545,255 8.30% 22,545,255 6.22%
James Njuguna Mwangi 19,898,505 7.32% 19,898,505 5.49%
John Kagema Mwangi 17,100,000 6.29% 17,100,000 4.72%
Equity Bank employees' share ownership plan 15,018,400 5.53% 15,018,400 4.15%
Africap Limited 15,000,000 5.52% 15,000,000 4.14%
Andrew Mwangi Kimani 10,928,040 4.02% 10,928,040 3.02%
Fortress Highlands Limited 10,101,000 3.72% 10,101,000 2.79%
Peter Kahara Munga 8,707,479 3.20% 8,707,479 2.40%
Simon Kagwanja Thuo 6,515,895 2.40% 6,515,895 1.80%
Other shareholders (over 7600) 105,797,387 38.94% 105,797,387 29.21%
Helios EB Investors LP 0 0.00% 90,516,255 90,516,255 24.99%
PART 4– INFORMATION ON EQUITY BANK SHARE PRICE
As set out earlier, Helios EB has agreed to subscribe for the New Shares (being 90,516,255 ordinary shares) at a price of KES 122/- per ordinary share, making an aggregate investment of approximately KES 11 billion. The price reflects the volume-weighted average daily price per ordinary share for each trading day on the NSE for the period 23rd July, 2007 to 22nd October, 2007, both dates inclusive.
The graph below shows the average daily price at which ordinary shares traded on the NSE over the period from 2nd May, 2007 to 13th November, 2007 and the volumes traded on each trading day. The information is also shown in tabular form in Appendix 2.
Equity Bank share price history
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 02-M ay-0 7 09-M ay-0 7 16-Ma y-07 23-M ay-0 7 30-M ay-0 7 07-Jun -07 14-Ju n-07 21-Ju n-07 28-Ju n-07 05-Ju l-07 12-Jul -07 19-Ju l-07 26-Jul -07 02-A ug-0 7 09-A ug-0 7 16-A ug-07 23-A ug-0 7 30-Au g-07 06-S ep-07 13-S ep-0 7 20-Se p-07 27-S ep-0 7 04-O ct-07 12-Oc t-07 19-O ct-07 26-O ct-07 02-No v-07 09-N ov-0 7 Trading day N u m b er o f sh ar es tr ad ed 0 20 40 60 80 100 120 140 160 KE S p er s h ar e
Relevant period for allotment price Volume traded Average trading price per share Agreed price per share
Source: Nairobi Stock Exchange
Analysis of this information shows that the price per ordinary share that Helios EB is paying to subscribe for the New Shares represents a premium over the average price at which the ordinary shares have been trading at the NSE in the recent past.
Period between 23rd July 2007 and 22nd October 2007
Past 30 trading days to 13th November 2007
Past 7 trading days to 13th November 2007
Number of shares traded 15,957,654 6,779,750 1,078,000
Value of shares traded (KES'000) 1,942,706 779,791 127,496
Weighted average price per share (KES) 121.74 115.02 118.27 Source: Analysis of data from Nairobi Stock Exchange
PART 5-INFORMATION ON HELIOS
INTRODUCTION
Helios manages capital on behalf of a group of investors, comprising multi-lateral organisations, development finance institutions, leading global investment firms, the investment offices of prominent families, high net worth individuals, and all of Helios’ own investment professionals. While no single investor represents more than 15% of the firm’s capital, some of the largest are profiled below:
CDC Group (“CDC”) CDC is a UK government-owned fund of funds, with net assets of US$4billion. CDC utilises its own balance sheet to invest in private equity funds focused on the emerging markets of Asia, Africa and Latin America, with particular emphasis on South Asia and sub-Saharan Africa.
U.S. Overseas Private Investment Corporation (“OPIC”)
OPIC is an independent U.S. government agency whose mission is to mobilise and facilitate the participation of U.S. private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from non-market to market economies. OPIC assists U.S. companies by providing financing (from large structured finance to small business loans), political risk insurance, and investment funds. OPIC complements the private sector in managing risks associated with foreign direct investment and supports U.S. foreign policy.
The International Finance Corporation (“IFC”) The IFC is the private sector investment arm of the World Bank Group. IFC provides loans, equity, structured finance and risk management products, and advisory services to build the private sector in developing countries.
Helios is one of the largest investment firms focused on making private equity investments exclusively in sub-Saharan Africa. The firm’s approach combines world-class private equity investment skills and investment judgment, with a high degree of hands-on operational involvement with portfolio companies, and is supported by a strong network of reliable and trusted local financial, industrial and governmental contacts.
The firm’s principals have significant depth of experience in private equity investing across a broad range of industries and the full spectrum of investment types including leveraged buyouts, recapitalizations, joint ventures, seed-stage venture capital, restructurings, and strategic public equity investments. Equally importantly, the principals possess significant operational expertise derived from their collective involvement in the conceptualisation, creation and development of several new businesses in various markets and from having played critical operating roles in corporate turnaround situations.
Helios and related co-investment entities manage in aggregate more than $450 million in capital commitments, which are deployed across a diverse range of investment types, including business formations, growth equity investments, structured investments in listed entities and large scale leveraged acquisitions. In addition, Helios manages the $110 million Modern Africa Fund on behalf of a range of investors which include the U.S
Government’s Overseas Private Investment Corporation, Citigroup, Archer Daniels Midland, The Equitable and Société Générale.
The principals of Helios believe that the firm is well positioned to serve as a “bridge” between the sub-Saharan Africa region, on the one hand, and Europe and North America, on the other and that its approach will yield opportunities to build growing and profitable businesses in the sub-Saharan African region while contributing to the socio-economic development of the region.
HELIOS TRACK RECORD
Modern Africa Fund: In August 2004, Helios reached agreement with the Limited Partners of the Modern Africa Fund (including the US Overseas Private Investment Corporation, Citigroup, Microsoft Corp., Archer Daniels Midland, The Equitable and Societe Generale), to take over management of the then highly distressed portfolio of sub-Saharan African private equity investments, with the objective of stabilizing the individual companies, rationalizing the portfolio, and maximizing value.
The portfolio, comprising 9 companies in countries including Kenya, Ghana, Republic of South Africa and Cote d’Ivoire, was valued at approximately US$19 million. By identifying the potentially viable companies within the portfolio and providing them with strategic guidance and operational assistance, and by leading critical business development efforts, Helios was able to create significant value within the portfolio. As of October 2007, Helios has successfully exited all of the investments within the portfolio, returning approximately 2.5x the value at the point of take-over, achieving an internal rate of return in excess of 45%.
HTN: HTN builds, owns and operates telecommunication towers sites in Nigeria which it provides to wireless telecommunications operators on long-term leases. While the HTN business model has been established in the American and European markets, HTN remains the only provider of such services in Africa.
HTN was conceived, founded and built by the principals of Helios who identified the opportunity to reduce the network roll-out costs of wireless telecommunications operators and reduce the environmentally undesirable proliferation of telecommunication tower sites by providing tower sites on a shared – co-location – basis. The principals of Helios developed the business plan, recruited the management team and a technical partner, negotiated and executed customer contracts, and raised debt and equity financing for the company.
After 13 months of operation, HTN is a rapidly growing and solidly profitable business, focused on continuing to build its operations within Nigeria, while selectively evaluating regional expansion opportunities.
First City Monument Bank PLC (Nigeria): In April 2007, Helios completed a $50 million acquisition of a 16% interest in First City Monument Bank PLC (Nigeria) (“FCMB”), a rapidly growing universal bank in Nigeria with over $2 billion in assets. The bank, which is listed on the Nigerian Stock Exchange, is capitalising on the low penetration of banking services within the country, and strong underlying economic growth trends, to build a strong position in retail banking, while maintaining its traditional leadership in corporate banking. Helios is actively supporting management’s efforts in executing on the corporate strategy and in team building. Helios is represented on the bank’s board of directors and on its key committees.
FCMB’s operating performance following Helios’ investment has been strong. As a result, its share price has increased from Naira 4.25 at the time agreement with Helios was reached, to Naira 17.45 currently. This share price performance has significantly exceeded the performance of the Nigerian Stock Exchange generally, and that of most of FCMB’s peer group.
Seeking to capitalize on the opportunities presented to the bank, FCMB, with Helios’ assistance, is currently in the process of completing a public offer which is expected to raise an additional US$750 million in equity capital.
AfricaTel: In August 2007, Helios completed the $160 million purchase of a 22% interest in AfricaTel, a newly formed holding company aggregating all of the sub-Saharan Africa telecommunications assets of the Portugal Telecom Group (principally in Angola, Namibia, Cape Verde, Sao Tome), in a leveraged recapitalization valuing AfricaTel at $1.175 billion on a total enterprise value basis. The transaction was completed using $450 million of debt financing. Helios is spearheading AfricaTel’s efforts to consolidate and grow the existing businesses, while selectively evaluating opportunities to expand the company’s geographic footprint within sub-Saharan Africa.
Helios is currently working to strengthen the management team, assist in driving higher rates of growth and profitability within the respective markets, while identifying new opportunities for expansion outside the existing markets.
POST-INVESTMENT VALUE-CREATION
The principals of Helios believe that a high degree of hands-on operational involvement with portfolio companies is a critical factor to the success of investments in Sub-Saharan Africa. In light of that, Helios seeks to support portfolio company management teams by playing the following roles, where applicable, in each portfolio company.
• Board functions: Take a proactive role in: (i) the recruiting and development of management talent, structuring and implementation of incentive compensation schemes and other human resource initiatives; (ii) the development of budgets and long term strategic plans; (iii) development and active monitoring of Key Performance Indicators; and (iv) the development and execution of financing strategies.
• Executive functions: Assist management in (i) the negotiation of major commercial agreements, including supplier contracts; (ii) product pricing and other commercial decisions having strategic implications.
• Business Development activities: (i) leverage local and foreign business contacts in customer acquisition, formation of alliances, joint ventures and other value-enhancing relationships; and (ii) leverage local public and private sector contacts for regulatory problem-solving.
• Portfolio “network effects”: (i) expose portfolio company management to best-in-class business in the same sector; (ii) create forums such as CEO conferences for sharing of best practices across portfolio companies.
THE PRINCIPALS
Temitope O. Lawani, Managing Director
Mr Lawani is co-founder of Helios and has 13 years of principal investment experience. Prior to forming Helios, he was a principal at the San Francisco and London offices of Texas Pacific Group (“TPG”), a leading global private equity firm managing over $30 billion in capital. At TPG, Mr Lawani had a lead role in the execution of over $10 billion worth of closed venture capital and leveraged buyout investments, including the acquisitions of Burger King Corp., Debenhams plc., J. Crew Group, and Scottish & Newcastle Retail. Mr
Company in Burbank, California. He serves on the boards of directors of First City Monument Bank PLC, AfricaTel, HTN, and Finacity and, until recently, was a member of the board of directors of Millicom International Cellular SA (Luxembourg; NASDAQ: MICC). He also serves as a member of the Harvard Law School Dean’s Advisory Board. Mr Lawani received his BS in Chemical Engineering from the Massachusetts Institute of Technology, Juris Doctorate (cum laude) from Harvard Law School and MBA (2nd Year Honors) from Harvard Business School.
Babatunde T. Soyoye, Managing Director
Mr Soyoye is co-founder of Helios. Prior to forming Helios, Mr Soyoye also was a TPG principal responsible for telecommunications and media investments across Europe. Mr Soyoye has over 11 years of principal investment experience and has played a key role in the execution of over $7 billion completed investments across Africa, Europe, Asia and North America. Mr Soyoye is a former Executive Consultant to Actis, an emerging market private equity fund and was a Senior Member of the Corporate Strategy team at British Telecom, and a Manager of Business Development at Singapore Telecom International. He now serves on the Boards of Directors of AfricaTel, HTN and PSPLS, and until recently, was a member of the board of directors of Afsat, Africa’s leading broadband ISP based in Kenya. Mr Soyoye received his BEng in Engineering and MBA from the University of London (Kings & Imperial College).
Helios also has in its team a chief operating officer, an operating partner, several vice presidents and senior associates who are drawn from various countries in Africa and other parts of the world including Nigeria, Ghana, Togo, Sudan, Bulgaria and Spain. These team members are all highly qualified and have many years of principal investment and investment banking experience.
PART 6–ADDITIONAL DISCLOSURES
1 Responsibility Statement
1.1 The Directors, whose names appear on page 4 of this Circular accept responsibility for the information contained in this Circular. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this Circular is in accordance with the facts and does not omit anything likely to affect the import of such information.
1.2 The Directors are the persons responsible for the application made to the CMA pursuant to paragraph 17 of the Fourth Schedule to the PoS Regulations.
2 The Company’s share capital
2.1 The authorised and issued share capital as at the date of this Circular is KES 1,500,000,000/- divided into 300,000,000 ordinary shares of KES 5/- each of which 271,693,650 ordinary shares of KES 5/- are issued fully paid (having a nominal value of KES 1,358,468,000/-). The authorised and issued share capital of the Company is not divided into different classes of shares and all of the ordinary shares carry equal rights.
2.2 The Articles of Association describe all of the rights attached to the ordinary shares as regards such matters as voting, dividends, liquidation proceeds and other matters. A copy of the Articles of Association are available for inspection as noted in paragraph 6 below.
2.3 The New Shares shall rank pari passu with the existing ordinary shares, shall be of a par value of KES 5/- each and shall, upon issue, be credited as fully-paid up but shall not qualify for the dividend (if any) that may be declared for the financial year ending on 31st December, 2007.. The New Shares shall rank for dividend in respect of the financial year ending on 31st December, 2008 and beyond. Upon completion of the Investment Helios EB will receive a share certificate for the New Shares.
2.4 The number of New Shares to be created is 62,209,905, and a total of 90,516,255 New Shares are expected to be admitted to Listing on 31st December, 2007.
2.5 At a meeting held on 14th November, 2007 the Board resolved, pursuant to Article 51 of the Articles of Association, to convene the EGM for the purpose of amongst other things, seeking approval from the Company’s shareholders to the Investment, authorising the directors to issue the New Shares for cash without first offering them to existing shareholders, increasing the authorised share capital of the Company and making certain amendments to the Articles of Association of the Company.
2.6 As at 30th September, 2007 the ten largest shareholders of the Company were as follows:
Shareholder Number of shares Shareholding %
British-American Investments Company (Kenya) Limited 40,081,689 14.75
Nelson M. Njoroge 22,545,255 8.29
James N. Mwangi 19,898,505 7.32
John K. Mwangi 17,100,000 6.29
Equity Bank Employee Share Ownership Plan 15,018,400 5.52
Africap Limited 15,000,000 5.52
Andrew Mwangi Kimani 10,928,040 4.02
Fortress Highlands Limited 10,101,000 3.71
Peter K. Munga 8,707,479 3.20
Simon K. Thuo 6,515,895 2.39
Others (over 7,600 shareholders) 105,797,387 38.99
TOTAL 271,693,650 100.00
2.7 As a result of the Investment the ten largest shareholders of the Company will be as follows:
Shareholder Number of shares Shareholding %
Helios EB 90,516,255 24.99
British-American Investments Company (Kenya) Limited 40,081,689 11.07
Nelson M. Njoroge 22,545,255 6.22
James N. Mwangi 19,898,505 5.49
John K. Mwangi 17,100,000 4.72
Equity Bank Employee Share Ownership Plan 15,018,400 4.15
Africap Limited 15,000,000 4.14
Andrew Mwangi Kimani 10,928,040 3.02
Fortress Highlands Limited 10,101,000 2.79
Peter K. Munga 8,707,479 2.40
TOTAL 362,209,905 100.00
2.8 As at the date of this Circular, neither Helios nor Helios EB held any ordinary shares.
3 Director’s Interests
3.1 At the date of this Circular, the following Directors had direct and indirect beneficial equity interests in the ordinary shares as follows:
Director Number of shares Shareholding %
James N. Mwangi 19,898,505 7.32% Peter K. Munga 8,707,479 3.20% Linus W. Githai 1,599,795 0.58% Benson Wairegi 907,500 0.33% Frederick M Muchoki 800,066 0.29% Julius Kipng’etich 110,295 0.04%
* By virtue of their shareholding interest in British-American Investments Company (Kenya) Limited (“Britak”) which holds 14.75% of the issued shares of the Company, Peter K. Munga (who has a 18.5% beneficial shareholding in Britak) holds an additional beneficial interest of 2.73% of the issued shares in the Company, James Mwangi ( who has 5% shareholding in Britak) holds an additional interest of 0.74%, while Benson Wairegi (who has 6.30% shareholding in Britak) holds an beneficial interest of 0. 93% in the ordinary shares.
3.2 At the date of this Circular, there was no existing or proposed contract between any of the Directors and the Company, other than employment contracts for those Directors who are employed in the ordinary course of business.
3.3 No options to purchase any securities of the Company have been granted to or exercised by any Director of the Company.
3.4 None of the Directors has or has had any direct or indirect beneficial interest in any property acquired by the Company during the two years preceding the date of this Circular.
3.5 Neither of the directors proposed for appointment to the Board by Helios EB has or has had any direct or indirect beneficial interest in any property acquired by the Company during the two years preceding the date of this Circular.
4 Consents
Ernst & Young have given and not withdrawn their consent to the issue of this Circular with the inclusion herein of the references to their report, in the form and context in which they appear.
5 General Information
5.1 Part 5 contains a description of the business, directors, management and major shareholders of Helios.
5.2 By an Investment Agreement dated 14th November, 2007 made between the Company and Helios EB, Helios EB agreed to pay KES 11,042,983,110/- in cash for an allotment of 90,516,255 New Shares, representing 24.99% of the issued share capital as enlarged pursuant to the resolution to be proposed at the EGM. A copy of the agreement is available for inspection by shareholders of the Bank as noted in paragraph 6 below.
5.3 The fees payable in respect of the Listing of the New Shares are KES 483,000/-.
5.4 In accordance with the disclosure requirements under paragraph 28(a) of The Fourth Schedule to the PoS Regulations, the Board hereby declares that the annual financial statements of the Company for the year ended 31st December, 2006 have been audited and received an unqualified opinion. Extracts from these audited financial statements are included in Appendix 1.
5.5 The Company’s auditors, Ernst & Young have issued a statement, in respect of the periods audited by them, under paragraph 28(b) of The Fourth Schedule to the PoS Regulations which requires the auditor to consider whether all circumstances regarding the issue of the New Shares known to them which could influence the evaluation by investors of the assets, liabilities, financial position, results and prospects of the Company are included in the Circular.
6 Documents Available for Inspection
Copies of the following documents will be available for inspection by shareholders, free of charge, at the Company’s offices at 14th Floor, NHIF Building, P.O. Box 75104, Nairobi, 00200, Kenya between 9.00 a.m. and 5.00 p.m. Monday to Friday (except public holidays) from the date hereof until 31st December, 2007:
(a) the Investment Agreement referred to in paragraph 5.2 above (together with copies of the statutes referred to in the Agreement:
(i) Income and Corporation Tax Act 1988 (ii) Contract (Right of Third Parties) Act 1999 (iii)Foreign Corrupt Practices Act of 1977)
(b) the Company’s audited financial statements for the five financial years ended 31st December, 2006 (c) the Company’s Memorandum and Articles of Association
(d) the approvals of the CBK relating to the Investment
(e) the statement issued by the Company’s auditors as required by regulation 28(b) of the Fourth Schedule of the PoS Regulations
PART 7–EGMNOTICE AND PROXY FORM
Equity Bank Limited
Incorporated in Kenya under the Companies Act (Cap 486 of the Laws of Kenya) (Registration Number C. 4/2005)
N
OTICE OFE
XTRAORDINARYG
ENERALM
EETINGNOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING of the Company will be held at 10.00 a.m. on 21st December, 2007 in the Amphitheatre of the Kenyatta International Conference Centre (“KICC”), Nairobi, Kenya for the purpose of considering and, if thought fit, passing the resolutions set out below.
ORDINARY RESOLUTIONS
(1) THAT, pursuant to Article 46 of the Articles of Association, the authorised share capital of the Company be increased from KES 1,500,000,000 divided into 300,000,000 ordinary shares of KES 5/- each to KES 1,811,049,525/- by the creation of an additional 62,209,905 ordinary shares of KES 5/- each, such new ordinary shares to rank pari passu in all respects with the existing issued ordinary shares of KES 5/- each in the share capital of the Company and, pursuant to Article 47, the existing shareholders hereby waive any and all entitlement to apply for and to subscribe for any of the 90,516,255 ordinary shares referred to in resolution (2) below.
(2) THAT, subject to resolution (1) above being passed the subscription for shares in the Company by Helios EB Investors, L.P., on the terms of the investment agreement between the Company and Helios EB Investors, L.P. dated 14th November, 2007, be and is hereby approved and in accordance with Article 47 of the Articles of Association, the Directors be and are hereby authorised to allot 90,516,255 new ordinary shares of KES 5/- each representing 24.99% of the issued ordinary share capital as increased by resolution (1) above, such new ordinary shares to be issued credited as fully-paid up to Helios EB Investors, L.P., in consideration of the payment by Helios EB Investors, L.P., of the sum of KES 122 per ordinary share, amounting to an aggregate cash subscription by Helios EB Investors, L.P., of KES 11,042,983,110/- in the share capital of the Company.
SPECIAL RESOLUTION
(3) THAT, the Articles of Association of the Company be amended as follows:
(a) THAT the Articles of Association of the Company be amended so as to insert the following at the end of Article 1:-
“The headings are inserted for convenience only and do not affect the construction of these Articles. Unless otherwise expressly stated, references to statutory provisions or enactments shall include references to any amendments, modification, extension, consolidation, replacement or re-enactment of any such provision or enactment (whether before or after the date of these Articles), to any previous enactment which has been replaced or amended and to
any regulation, instrument or order or other subordinate legislation made under such provision or enactment.”
(b) THAT the Articles of Association of the Company be amended so as to insert the following as Articles 34A and 34B:-
“34A The Company may sell (in such manner and for such price as the Board thinks fit) the shares of a Member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy if:
(a) During the period of six (6) years prior to the date of the publication of the advertisement referred to in paragraph (b) below (or if published on different dates, the first date), being a period during which at least three dividends have been payable, all warrants and cheques in respect of the shares in question sent in the manner authorised by these Articles have remain uncashed; and
(b) The Company on expiry of six (6) years from the last time the Company received indication of the whereabouts or the existence of the Member of person has given notice, by advertisement in a newspaper having national circulation, of its intention to sell the shares; and
(c) During the period of six (6) months following the publication of the advertisement the Company has received no indication either of the whereabouts or of the existence of the Member or person; and
(d) Notice has been given to the Nairobi Stock Exchange of its intention to make the sale.
34B To give effect to the sale the Board may appoint any person to execute as transferor an instrument of transfer of the shares or other competent instrument. The instrument of transfer or other competent instrument shall be as effective as if it had been executed by the registered holder of, or the person entitled by transmission to, the shares and the title of the transferee shall not be affected by any irregularity or invalidity of the proceedings. The net proceeds of the sale shall belong to the Company which shall be obliged to account to the Member or other person previously entitled for an amount equal to the net proceeds (after deducting the reasonable expenses of the advertisement and transaction costs incurred by the Company) and the Company shall enter the name of the former member or other person in the books of the Company as a creditor for that amount. No trust shall be created in respect of the debt, no interest shall accrue or be payable in respect of it and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments as the Board thinks fit. If after a further period of three (3) years from the date of the instrument of transfer referred to above no claim has been made by a former member or person previously entitled to the net proceeds, the net proceeds shall become the absolute property of the Company and no person shall have any claim whatsoever against the Company arising therefrom.”
(c) THAT Article 42 of the Articles of Association of the Company be amended by deleting the word “ordinary” in the first line and replacing it with the word
“special”
(d) THAT Article 46 of the Articles of Association of the Company be amended by deleting the word “ordinary” in the first line and replacing it with the word
“special”
and by deleting the words “or, in default of such direction, as the Directors shall determine.”
after the words “…the resolution shall direct…” in line two of the Article.
(e) THAT Article 50 of the Articles of Association of the Company be amended by deleting the word “ordinary” in the first line and replacing it with the word
(f) THAT Article 79 of the Articles of Association be amended as follows:-
(i) by deleting the reference to “…five…” in the second line and replacing it with
“…seven (7)…”;
by inserting ”…(12)…” after the words “…more than Twelve…” in the third line. (g) THAT Article 84 of the Articles of Association be amended by inserting the words “…or
delayed…” after the words “…(such consent not to be unreasonably withheld…” in the first and second lines.
(h) THAT Article 95(3) of the Articles of Association be amended by inserting after the word “shall” in the first line the following words “unless he has declared the nature of his interest in accordance with section 200 of the Act”.
(i) THAT Article 97 of the Articles of Association be amended as follows:- (i) by inserting the following as 97(b):
“…of the names of the Directors present at each meeting of the Directors and of any committee of the Directors”;
(ii) by renumbering the current 97(b) accordingly; and
(iii) by inserting the following as a proviso to Articles 97 after 97(c):
“…and every Director present at any meeting of Directors or committee of Directors shall sign his name in a book to be kept for that purpose. Minutes of all Board and committee meetings shall be circulated as soon as practically possible and in any event within three (3) weeks from the date of the meeting.”
(j) THAT the Articles of Association of the Company be amended so as to insert the following as Article 98A:-
“98A The following resolutions of the Board shall as a condition of them becoming effective require to be passed by all but one Director present at a quorate meeting of the Board from time to time:
(a) any change to the dividend policy of the Company from time to time; (b) the adoption of any business plan or annual budget from time to time; (c) any change to the charters of the Board committees.”
(k) THAT Article 100(5) of the Articles of Association be amended as follows:-
(i) by deleting the reference to “…two…” in the third line and replacing it with “…three (3)…”;
(ii) by deleting the reference to “…seven…” in the third line and replacing it with
“…twenty-one (21)…”.
(l) THAT Article 101 of the Articles of Association be amended as follows:-
(i) by deleting the words “…retire from…” in the fourth line and replacing them with
“…hold…”;
(ii) by deleting the word “…at…” in the fourth line and replacing it with “…only until…”;
(iii) by deleting the word “…ordinary…” in the fifth line and replacing it with
“…annual…”;
(iv) by deleting the word “…but…” in the fifth line and replacing it with “…and…”; (v) by inserting the following after the words “…meeting as an additional Director…”in
the final line:
“but shall not be taken into account in determining the directors who are to retire by rotation at such meeting.”
(m) THAT Article 102 of the Articles of Association be amended by inserting the words “…and may also determine in what rotation the increased or reduced number is to go out of office.…” after the words “…number of Directors…” in the second line.
(n) THAT Article 104 of the Articles of Association of the Company be amended as follows:- (i) by inserting the following after the first sentence:
“…Save as may otherwise be provided in these Articles, …”;
(ii) by inserting the following after the words “…at any time summon a meeting of the Directors” in the fifth line:
”There shall be given to each Director not less than seven (7) days notice in writing (whether in the case of a routine Board meeting or in the case where a meeting has
been requested by a Director) of a meeting of the Board except in the case of an emergency (the Chairman shall in his sole discretion have the right to decide on whether there is an emergency) in which case three (3) days notice in writing shall be provided, such notice to contain an agenda for the proposed meetings specifying the nature of the business to be conducted at such meeting and all papers necessary for consideration by Directors at such meeting. Notices to Directors in Kenya shall be sent in such manner as the Directors may from time to time determine as being the most effective way of dispatching notices but notices to Directors not resident in Kenya shall be send by international courier to the Director’s usual place of business and shall be deemed to have been received by the Director when delivered to such address.”;
(iii) by inserting the following after the final sentence:
“Meetings of the Board shall be held at least once in every three (3) months.”
(o) THAT Article 105 of the Articles of Association be amended by inserting the following after the first sentence:
“A Director shall be deemed to be present at any Board or committee meeting if he is able to hear and understand all of the proceedings of the meeting and be heard by all present by way of a telephone or other suitable means of communication and such Director indicates his willingness for the meeting to proceed on that basis.”
(p) THAT Article 110 of the Articles of Association be amended by inserting the following after the first sentence:
“Save as may otherwise be provided in these Articles, …”.
(q) THAT Article 112 of the Articles of Association be amended as follows:-
(i) by deleting the words “…a majority of…” in the first line and replacing them with
“…all…”;
(ii) by inserting the words “…for the time being entitled to receive notice of a meeting of the directors…” after the words “the Directors” in the first line.
(r) THAT Article 133 of the Articles of Association of the Company be amended by deleting the reference to “…Article 32…” in the fifth line and replacing it with “Article 33…”.
(s) THAT Article 134 of the Articles of Association of the Company be amended by inserting the words “by special resolution” after the words “The Company” in the first lineof the Article. (t) THAT the Articles of Association be amended so that references to “member” are amended to
“Member” throughout the Articles.
(u) THAT the Articles of Association be re-numbered accordingly.
By order of the Board Mrs Mary Wangari Wamae Company Secretary 29th November, 2007
A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a member of the Company.
Equity Bank Limited
EXTRAORDINARY GENERAL MEETING 21st December, 2007 PROXY FORM
I/We ___________________________________________________________________________________ ________________________________________________________________________________________ CDS A/C No _________________________________________
of (address) ______________________________________________________________________________ being a member(s) of Equity Bank Limited, hereby appoint
________________________________________________________________________________________ of (address) ______________________________________________________________________________ ___________________________________________ or, failing him, the duly appointed Chairman of the meeting to be my/our proxy, to vote on my/our behalf at the Extraordinary General Meeting of the Company to be held on 21st December, 2007 at 10.00 a.m., or at any adjournment thereof.
As witness to my/our hands this __________ day of ________________________ 2007
Signature(s) ___________________________________________________________________
Notes:
1. This proxy form is to be delivered to the Company Secretary at 14th Floor, NHIF Building, Upper Hill, P.O. Box 75104, Nairobi - 00200, Kenya not later than 10.00 a.m. on 19th December, 2007, failing which it will be invalid.
2. A proxy form must be in writing and in the case of an individual shall be signed by the shareholder or by his attorney, and in the case of a corporation the proxy must be either under its common seal or signed by its attorney or by an officer of the corporation.
--- CUT ALONG DOTTED LINE
---ADMISSION CARD
PLEASE ADMIT ____________________ ____________________________________ to the Extraordinary General Meeting of Equity Bank Limited which will be held in the Amphitheatre at the Kenyatta International Conference Centre (“KICC”), Nairobi, 00100, Kenya on 21st December, 2007 at 10.00 a.m.
This admission card must be produced by the shareholder or his proxy in order to obtain entrance to the Extraordinary General Meeting.
Company Secretary
Name of Shareholder
Address of Shareholder
CDS Account Number:
