First Atlantic Bank has formally notified the Bank of Ghana over its planned “Merger” with Energy Commercial Bank.

JoyBusiness understands the required documents have been sent to the Central Bank for their "no objection" approval for the two parties to go ahead with the "marriage".

Possible approval and meeting of GHc400m   

There are strong indications that the Bank of Ghana is likely to give its "no objection" to the deal, paving the way for the two institutions to finalize the “merger”. This would ensure that the “merged” entity would meet the new capital requirement ahead of the December 31 deadline. 

Sources say new capital level for the “merge entity” would be more than GHc400 million before the end of this year. 

Apart from the two banks bringing their capital together, First Atlantic Bank is said to be bringing additional funds that they raised from some strategic investors during its recent private placement that they carried earlier this year as well as some private equity firms.  

Is it a merger or a takeover?

Sources say First Atlantic Bank’s "marriage" with Energy Commercial Bank is a merger but could be technically described as a “takeover”. 

JoyBusiness understand that the deal would result in a share swap, this could mean that there might not be an "outright cash" purchase, while, Energy Commercial Bank would have shares in the new entity that would be created. 

JoyBusiness is learning that the new entity would still be known as First Atlantic Bank.

 First Atlantic Bank’s “merger” with Energy Commercial Bank

Energy Commercial Bank is reported to have signed a Memorandum of Understanding MoU with First Atlantic Bank to help them recapitalized in case they are not able to raise the GHc340 million from their  Initial Public Offering (IPO).

Energy Commercial Bank last October launched its Initial Public Offer to raise GH₵340 million in shares from the Ghanaian investing public.
The Bank was seeking to float millions of shares at GHS1.30p per share.

Failed IPO

However, Energy Commercial Bank last week said it failed to raise the minimum amount required for its Initial Public Offer (IPO).

“The minimum amount to make the Offer successful was not raised and therefore refunds will be made to all applicants. Applicants are advised to contact receiving agents or receiving banks where they applied for shares in the Offer to receive their refund,” the Bank said in a statement. 

The Bank said, “Applicants should ensure that they have proof of their application (e.g. receipt) and proof of identification when they contact the respective receiving agents or receiving banks.”

Refunds will be available at the registered offices or branches of the respective receiving agents and receiving banks from 14 December 2018.

Requirements for a successful IPO

The IPO consisted of an offer for subscription of 261,538,462 new ordinary shares of Energy Commercial Bank Limited to raise GHS 340,000,000 on the main board of the Ghana Stock Exchange (“the Offer”).

The minimum amount to be raised for the Offer to be declared successful was GHS 68,000,000. 

In the event that this amount was not obtained, then all monies paid for ECBL shares under the Offer are to be returned to the receiving banks and receiving agents for onward distribution to applicants after the Offer period has ended.