Michelmores has advised the world’s largest development organisation, BRAC, on the transformation of its microfinance operation in Uganda into a bank. The transaction aims to broaden and deepen financial inclusion for hundreds of thousands of people. The team comprised Partner Joe Whitfield, Senior Associate Harry Trick and Associate James Whistler.
The NGO has diluted its 100% shareholding in BRAC Uganda Bank Limited, held through BRAC International Holdings BV, to meet regulatory requirements of transforming the biggest microfinance operation in Uganda into a Tier 2 Credit Institution.
Three investors have each acquired 17% of BRAC Uganda Bank Limited. The new equity partners include German development finance institution DEG (Deutsche Investitions – und Entwicklungsgesellschaft mbH), Equator Capital Partners, the experienced fund manager investing in financial inclusion, and Triple Jump, the Dutch impact investment manager. BRAC International plans to use the proceeds of the sale to further expand its operations in other countries with low levels of access to finance.
Starting in 2006, BRAC Uganda now serves over 200,000 clients, with its 163 branches in 84 districts of the country. As part of its commitment to provide a range of financial services particularly for women in rural and low-income communities, BRAC has been pursuing a change in its regulatory status. With the new license, BRAC Uganda Bank Limited will be able to offer savings accounts, money transfer, insurance and other financial services besides credit products to Ugandans.
“Becoming a bank is not the end in itself, but a means to an end,”
said Shameran Abed, the Senior Director of BRAC’s Microfinance and Ultra-Poor Graduation programme.
“We are now in a stronger position to not only provide far greater value to the hundreds of thousands of clients that we already serve but to achieve greater financial inclusion in Uganda by serving many hundreds of thousands more who are outside of the formal financial system.”
Speaking about the transition from a Tier 4 microfinance institution to a Tier 2 regulated Credit Institution, Jimmy Adiga, the CEO of BRAC Uganda Bank Limited, said:
“It has been a journey dubbed by the staff of BRAC at all levels as ‘a journey where execution meets passion’”.
Head of Emerging Markets at Michelmores, Joe Whitfield, added:
“We are delighted to have assisted BRAC on such a significant transaction. We look forward to seeing the expansion of its global operations and the much-needed boost in financial inclusion in Uganda”.
Enclude Capital Advisory UK Limited, a specialist impact investment bank owned by Palladium, acted as the sole financial advisor and Katende, Ssempebwa & Co Advocates (KATS) acted as BRAC’s Ugandan legal counsel.