Aureos exits Ugandan microlender in $25m deal

The emerging markets specialist has sold its stake in Uganda Microfinance Limited to Kenya-based Equity Bank, as it nears a $200m first close on its $400m Pan-African fund.

Emerging markets private equity firm Aureos Capital has exited its stake in small-deposit lender Uganda Microfinance Limited (UML) in a deal valued at just less than $26 million (€18 million).

Aureos invested $1 million in UML’s predecessor, Uganda Microfinance Union, in 2004, marking the firm’s first management buyout in the East African nation. The investment was made from its $40 million East African fund.

Kenya-based commercial lender Equity Bank has agreed to acquire UML through the sale of more than 8 million new Equity Bank shares to UML’s existing owners, which include Aureos and the Norwegian government-sponsored development fund Norfund. Equity Bank is publicly traded on the Nairobi stock exchange.

Formerly a locally owned non-governmental organisation founded to provide financial services to low income Ugandans, Aureos transformed UML into an officially licensed deposit taking institution sanctioned by the Bank of Uganda. 

Equity Bank said it plans to grow UML into a full-scale commercial bank.

Domiciled in Mauritius, Aureos’ pan-African fund focuses on providing expansion and buyout capital to unlisted mid-cap businesses in Asia, Africa and Latin America. The firm is partly owned by several government-sponsored development funds and multilaterals, including Norfund, the UK government-backed CDC Group, and the Dutch government-sponsored FMO.

The firm is currently raising a $400 million pan-African fund, and is nearing a first close of more than $200 million, according to a source familiar with the fund. Prior to the pan-African fund, officially launched last February, Aureos had split its African fundraising into East African, West African and South African funds.

Earlier this year, the firm said it planned to double its funds under management to $1.2 billion over the next 12 months.