Equity Group, led by James Mwangi, plans $30 million capital boost for subsidiaries

Key Points

• Equity Group to invest $30.4 million in Tanzania and Uganda as asset growth outpaces profit, ensuring financial stability without shareholder dilution.
• Regional subsidiaries now contribute 49% of total assets, with Tanzania’s profit soaring 107% and Uganda’s up 186%, reflecting strong performance.
• Despite robust earnings, Equity maintains a conservative dividend payout of $124.64 million, prioritizing reinvestment for sustained regional expansion.

Equity Group, East Africa’s largest financial services provider, led by Kenyan banker James Mwangi, is injecting $30.4 million into its Tanzanian and Ugandan subsidiaries as asset growth outpaces profit accumulation. The move reinforces the bank’s regional presence and strengthens balance sheets to keep pace with expansion.

Self-financed growth strategy

This latest Ksh3.9 billion ($30.4 million) investment follows previous infusions, including $10 million for Tanzania in 2022 and a significant $70 million for its Democratic Republic of Congo (DRC) operations. Since acquiring the DRC unit in 2015, Equity has expanded its balance sheet from Ksh19.3 billion ($150.07 million) to Ksh660 billion ($5.13 billion), demonstrating the bank’s aggressive push into regional markets.

Mwangi noted that while Uganda’s unit is profitable, it needs additional capital to sustain its rapid growth. Tanzania, after grappling with high non-performing loans, has now entered a growth phase. “Tanzania will require an additional $20 million, while Uganda may need $10 million to support expansion without diluting shareholders,” he said. Instead of seeking external funding, Equity is relying on internal resources, citing market undervaluation as a reason to avoid issuing new shares.

According to its 2024 annual report, regional operations now contribute nearly half of the group’s total assets and loans. In Tanzania, revenue grew by 20 percent year-over-year, with profit after tax jumping 107 percent, while Uganda’s profit surged 186 percent.

Regional expansion and profit surge

Under Mwangi’s leadership, Equity has deepened its footprint in Uganda, Tanzania, South Sudan, Rwanda, and the DRC. As the bank’s largest individual shareholder, with a 3.39 percent stake (127.8 million shares), he has overseen its transformation into a Pan-African banking powerhouse.

Equity’s retained earnings climbed from Ksh202.9 billion ($1.58 billion) to Ksh232.8 billion ($1.81 billion). Despite its strong financial position, the bank remains cautious with dividends, proposing a Ksh4.25 ($0.0329) per share payout, totaling Ksh16 billion ($124.64 million), or 34.5 percent of net earnings. The bank continues to deliver shareholder value, maintaining a return on equity (ROE) of 21.5 percent and a return on assets (ROA) of 2.8 percent, both above industry averages.

By December 2024, regional subsidiaries accounted for 48 percent of total deposits and loans, matching Kenya’s unit in profit contribution at Ksh46.5 billion ($362.22 million). With this latest capital injection, Equity is reinforcing its leadership in East Africa’s banking sector and positioning itself for long-term stability in an evolving financial landscape.