The Cameroonian government has announced its intention to acquire 58.08% stake in the local subsidiary of Société Générale. The country offered $191.6 million, according to letter from the Ministry of Finance. The government’s decision is based on legal provisions in Société Générale Cameroon’s statutes and follows a letter from the French banking group outlining its plans to exit and the conditions for its departure.

This news comes amid reports from a specialized media outlet suggesting that Société Générale had already reached an agreement with Burkina Faso’s Coris Bank to take over its stake in Cameroon. Coris Bank ranked second in the West African Economic and Monetary Union (WAEMU) in 2023, with total assets of nearly $3.7 billion. However, no official statement has confirmed this deal. The letter from Cameroon’s Finance Minister, Louis-Paul Motaze, suggests that a high-level decision has been made but does not disclose the identity of the potential buyer.

To determine the price for Société Générale’s stake, the Cameroonian government enlisted several subsidiaries of the consulting firm Grant Thornton. While the French banking group has not publicly disclosed its asking price, Minister Motaze’s letter refers to a “difference” between the proposed value and the government’s assessment, arguing that certain financial elements should be taken into account to lower the valuation. This suggests that Cameroon’s offer is lower than what Société Générale expected.

“Your sale project and the price offered by the potential buyer have been duly considered. However, following my letter No. 0008167/MINFI/SG/DGTCFM/DCFM dated July 10, 2024, a financial and tax due diligence mission, as well as a valuation assessment of the company, was carried out by our advisor, the Grant Thornton France/Cameroon/Côte d'Ivoire consortium. The results of these assessments have led to a different valuation than the one you mentioned in your correspondence,” the letter states.

Negotiations between the two parties will focus on the final sale price, which could fluctuate based on the bank’s future performance. Based on its own expert evaluations, Cameroon values future dividend flows at CFA75.8 billion (about $118 million), though the reference period for this calculation is unclear. Moreover, the government has revised the bank’s equity value down to CFA135.3 billion, factoring in potential losses and regulatory provisions.

One key uncertainty is how the Cameroonian government will finance the deal. The country is currently engaged in a program with the International Monetary Fund (IMF), which imposes strict budgetary discipline. At the same time, Cameroon is still looking for funds to acquire Actis’ stake in ENEO, the national electricity distribution company. Meanwhile, the government is in the process of selling its majority stake in the Commercial Bank of Cameroon.

Recent reports indicate that the government plans to retain up to 17% of Société Générale Cameroon while selling 30% through the Central African Stock Exchange (BVMAC). However, it still needs to find a key investor to take the controlling stake. In the Republic of Congo, the government waived its preemptive right to acquire Société Générale Congo, allowing local banking group BGFI to take over. While there have been signs that BGFI might be interested in Cameroon’s stake as well, the Gabonese holding company has never officially confirmed its intention to proceed with the acquisition.