The Republic Bank of Trinidad and Tobago has displaced the Social Security and National Insurance Trust (SSNIT) as the largest institutional shareholder in HFC Bank, raising fears of a possible takeover and subsequent rebranding of one of the country’s most established indigenous banks.
That was after the Republic Bank of Trinidad and Tobago raised its stake from about 8.8 per cent to 32.02 per cent on the back of new acquisitions from the Aeuros Africa Fund.
The fund, which is an equity investor, exited HFC earlier this month, according to correspondence from the Ghana Stock Exchange (GSE).
Given that Republic’s current interest in HFC is now above the mandatory takeover point of 30 per cent for listed companies, the HFC Bank, one of the country’s most celebrated indigenous banks, risks being fully taken over by the Trinidad and Tobago financier.
That will happen if the Securities and Exchange Commission (SEC) – the regulator of Ghana’s capital market – declines a pending request from the Republic Bank for a waiver of the law that mandates an investor who exceeds the mandatory takeover point to make an offer to buy out other shareholders.
Should that happen, the bank would then be forced to make an offer to buy out the other shareholders and that offer would be subjected to the approval of the affected shareholders.
But should those shareholders, who include the Ghana Cocoa Board, SIC Financial Services and SSNIT, among others, accept the offer, HFC Bank would subsequently be rebranded and turned into a foreign bank.
However, an Executive Director of HFC Bank, Mr Charles Acquah, told the GRAPHIC BUSINESS that the application for a waiver from the Republic Bank showed that “it doesn’t have intentions of taking over HFC.”
“If they had, they wouldn’t have applied for the waiver,” he said in an interview on June 12.
The Republic Bank, which is the largest financial institution in the Caribbean, paid some GH˘38.6 million in exchange for about 26.05 million shares – 23.23 per cent of HFC – initially held by the Aureos Africa Fund.
Having exceeded the mandatory takeover point of 30 per cent, the bank, according to a release from GSE, made an application to SEC to be exempted from having to make a mandatory offer to take over HFC.
Investors that own over 30 per cent interest in a listed company are, according to the Code of Takeovers and Mergers, mandated to make an offer to take over the company involved.
The SEC is yet to take a decision on the Republic Bank’s request but its Director-Genegral, Mr Adu Anane Antwi, told the GRAPHIC BUSINESS in a telephone interview that the request for a waiver is not an end in itself.
“It’s possible we will decline it. It’s also possible we’ll grant it but the best will be for the bank to prepare for both sides,” Mr Anwti said, declining to comment further in that regard.
He, however, hinted that the commission would be finding out why the Republic Bank is asking for the waiver and whether or not it had “sufficient resources” to buy off all other shareholders.
The issue of the availability of sufficient resources is relevant given that on the event that the SEC declines the waiver, Republic Bank would have to cough up some GH˘112.81 million to be able to make an offer to and possibly buy out the other shareholders.
Its offer could, however, be turned down by the other shareholders should those affected not be satisfied with it.
The bank, which bought the additional 26.05 million shares at 56 pesewas per share, has, indicated that it has enough resources to satisfy a mandatory offer to all the other shareholders of the company.
The HFC Bank currently has about 296.36 million issued shares, of which about 94.91 million are now with the Republic Bank.
At a price of 56 pesewas per share, the Republic Bank will have to cough up some GH˘112.81 million to be able to make an offer to the remaining shareholders.
That, however, depends on the direction of SEC’s decision on the matter. The SEC DG says the decision should be expected soon.
“When we meet, we will look at why they don’t want to take over HFC, whether or not the takeover will benefit HFC and its stakeholders, among others.”
“It is these things that will help us come to a conclusion as to whether the request for waiver should be granted or not,” Mr Antwi added.