Finance

Facing Acquisition Roadblocks, Oragroup Turns to Recapitalization

Facing Acquisition Roadblocks, Oragroup Turns to Recapitalization
Thursday, 29 August 2024 15:35

Oragroup is shifting its strategy after running into difficulties with its planned acquisition by Vista Bank. The bank is now focusing on stabilizing its financial situation through recapitalization, following a downgrade by Fitch to a "CCC-" rating. Alongside this, Vincent Le Guennou is stepping down from his role as chairman of the board.

Last week, Oragroup decided to reassess its approach after facing regulatory hurdles in getting the necessary approvals from WAEMU for its acquisition by Vista Bank. The banking group, which operates in 12 countries across West and Central Africa, has now terminated its exclusive sale agreement and is moving towards recapitalization.

This decision comes amid financial difficulties, highlighted by Fitch Ratings' downgrade to "CCC-" in April. The rating agency pointed to the risk of a default on senior obligations, citing prolonged non-compliance with capital requirements and tight liquidity at the bank's holding company level.

August marked a year since the initial agreement with the Burkinabé group, and the main selling shareholders, including Emerging Capital Partners (ECP), the lead shareholder, along with the European Investment Bank, DEG (a KfW subsidiary), Proparco, and Envol Afrique LLC, have reconsidered their positions.

In August 2023, Vista Group announced its agreement to acquire 61.4% of Oragroup, the holding company of Orabank, intending to create a major banking player operating in 16 countries across West and Central Africa. The merged entities were expected to have over 270 branches and assets totaling more than $10 billion.

To facilitate this deal, Vista Group set up a special vehicle, "ORA SPV HOLDING," to acquire Oragroup's shares and secured financing from BOAD (CFA25 billion) and Afreximbank (€253 million). However, the transaction hit a snag due to the WAEMU Banking Commission's demands for additional guarantees from Vista Bank. The commission had ordered the recapitalization of the holding company, with a deadline set for December 31, due to observed deficiencies.

This situation presents a setback for Vista Bank’s expansion ambitions across 25 countries, as the bank has been aggressively pursuing growth in the African banking market.

As part of its new strategic direction, Oragroup, ranked 6th in assets in WAEMU and 8th in market share at the end of 2023, must strengthen its equity capital by the end of the year. These developments come amid tightening regulations aimed at ensuring the financial stability of the region's banking institutions.

There has also been a significant change in the board of directors, with the appointment of Ibrahima Diouf, a seasoned finance professional with over 30 years of experience, as the new chairman. He replaces Vincent Le Guennou, who now leads an investment fund focused on African infrastructure for Africa50. Before this appointment, Mr. Diouf was an advisor to the president of BOAD and held various roles, including managing director of EBI SA, the international subsidiary of Ecobank Transnational Incorporated (ETI). He has also worked with Barclays Bank Africa and CBAO in Dakar.

On the same topic
Tunisia seeks $3.7B loan from central bank in 2026 Economists warn of inflation, liquidity risks from domestic borrowing IMF talks stalled;...
Central Bank reduces policy rate by 25 basis points to 6.50% Move aims to back growth while maintaining rand peg Inflation forecast revised...
Saudi Exim Bank has opened its first African representative office in Casablanca, Morocco, to expand its regional footprint and boost Saudi non-oil...
Namibia confirms it has assembled the full amount necessary to redeem its largest-ever sovereign debt—$750 million due October 29. The redemption will...

Most Read
01

Côte d’Ivoire traced 40% of cocoa for 2024/25 season Most cocoa remains untracked due to info...

With 40% of Its Cocoa Traceable, Côte d’Ivoire Faces a Race to Meet New E.U. Standards
02

• World Bank raises 2025 growth forecasts for Benin, Mali, Burkina, Côte d’Ivoire• Senegal and Niger...

World Bank Revises Up 2025 Forecasts for Four WAEMU Countries, Amid Falling Inflation
03

• AfDB chief Sidi Ould Tah met BOAD president Serge Ekué in Abidjan on Aug. 30.• Talks focused on jo...

AfDB, BOAD join forces to expand financing for West Africa projects
04

Indorama to invest $210M in Senegal phosphate sector upgrade ICS to expand fertilizer, acid ...

Indorama, Petrochemicals Major, to Invest $210 Million in Senegal Fertilizer Plant
05

Africa holds 30% of key minerals for green tech. Leaders urge local processing to boost value...

African Countries Chart a New Green Industrial Path, Powered by Critical Minerals
Enter your email to receive our newsletter

Ecofin Agency provides daily coverage of nine key African economic sectors: public management, finance, telecoms, agribusiness, mining, energy, transport, communication, and education.
It also designs and manages specialized media, both online and print, for African institutions and publishers.

SALES & ADVERTISING

regie@agenceecofin.com 
Tél: +41 22 301 96 11 
Mob: +41 78 699 13 72


EDITORIAL
redaction@agenceecofin.com

More information
Team
Publisher

ECOFIN AGENCY

Mediamania Sarl
Rue du Léman, 6
1201 Geneva
Switzerland

 

Ecofin Agency is a sector-focused economic news agency, founded in December 2010. Its web platform was launched in June 2011. ©Mediamania.

 
 

Please publish modules in offcanvas position.