F
DH Bank plc says it is in the process of acquiring a controlling stake in one of the commercial banks in Africa as the Malawi Stock Exchange (MSE)-listed firm pursues its regional growth strategy.
The bank, which conducted market research in Zambia and Mozambique in the past two years, has cautioned its shareholders and stakeholders about an imminent transaction that could potentially affect its share price.
Without naming the bank, FDH Bank plc indicated in a cautionary statement signed by company secretary Juliano Kanyongolo that the negotiations are at an advanced stage, suggesting a deal could be reached soon.
Reads the statement in part: “The board of directors of FDH Bank plc wishes to advise the general public that the company is prospecting to acquire a controlling stake in a bank within the African region. This is in line with the bank’s strategy to pursue regional growth.”
During 2024 Investors Forum in May this year, FDH Bank plc managing director Noel Mkulichi confirmed the bank conducted market surveys in Zambia and Mozambique to assess the feasibility of penetrating the regional markets as part of its long-term expansion strategy.
He said FDH Bank wanted to tread carefully as it was conducting market research to minimise risks that could affect equity holders.
Said Mkulichi: “The markets are different in terms of legal and business environment, so we need to analyse further before investing.
“We are currently assessing the Zambian market and we will see whether there will be an acquisition. Last year, [2023] we went to Mozambique for a similar mission, but for now we are still doing the study.”
If FDH Bank plc successfully penetrates the regional markets, it will be among the three MSE-listed banks that have subsidiaries across Malawi borders after FMB Capital Holdings plc, through First Capital Bank, entered Zambia, Mozambique, Zimbabwe and Botswana markets while National Bank of Malawi plc owns 51 percent stake in Akiba Commercial Bank of Tanzania.
In an interview yesterday, financial consultant and former banking executive Misheck Esau said the regional expansion is a good development.
He said: “Trade in services just like exports of goods is the way to go for our companies.
“I really do not have any advice to give them except to encourage them to ride on their strengths on the Malawi market to become a strong player.”
Esau, however, stressed that when expanding outside, companies should always remember that Malawi remains under-serviced and there is a lot they can do locally to acquire more capacity.
In a separate interview yesterday, MSE chief executive officer John Kamanga described the move as critical to the economy as it signals maturity of the country’s financial sector and guarantees foreign exchange generation through dividends.
He said: “This is a good move as it means the said companies would be getting dividends in foreign exchange. Investing in various markets reduces the risks.”
Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa said such expansion is helpful to FDH Bank, because it could enhance profitability by accessing new markets and a broader customer base.
He said: “This expansion might also contribute to increased revenues, improved market share and ultimately better returns for shareholders.
“However, the success of such an initiative hinges on conducting thorough and comprehensive due diligence.”
Makwakwa said proper due diligence is critical to identifying and mitigating the diverse risks associated with international expansion, such as, political and economic instability as well as operational challenges.
FDH Bank plc, with a market capitalisation of about K1 trillion on MSE, had its share price trading at K148.23 as of yesterday. The bank expects its profit to jump to K62 billion in the year ended December 31 2024 from K35.6 billion year before.
