Target Company Overview

Development Partners International (DPI) announces the successful sale of its 27.7% stake in CAL Bank, one of Ghana’s leading independent banks, to Arise BV. Founded in 1990, CAL Bank is actively engaged in corporate, retail, and investment banking, and is recognized as the third-largest bank in Ghana by loans advanced. The bank, which is listed on the Ghana Stock Exchange, has historically demonstrated robust financial performance and impressive growth, driven by an adept management team committed to delivering high-quality banking services.

Since DPI’s investment in 2012, CAL Bank has showcased a remarkable profit growth trajectory, achieving a 77% annual increase in profit after tax from 2011 to 2015. This growth reflects the bank's successful implementation of strategic initiatives supported by DPI, strengthening its market presence in one of Africa's key emerging economies.

Industry Overview in Ghana

The banking sector in Ghana is characterized by rapid growth, driven by an expanding economy and a rising middle class. As of 2021, the Ghanaian financial sector has continued to evolve, with increased competition facilitating improved services and customer engagement. The introduction of advanced financial technologies further complements this growth, allowing banks to cater more effectively to consumer demand.

Moreover, the Ghanaian government has been proactive in implementing reforms aimed at enhancing the regulatory environment and ensuring the stability of the banking system. This has encouraged local and foreign investments, fostering a vibrant financial services landscape. The increasing mobile penetration rates in the country are also shifting banking services towards greater digitization, which represents an untapped opportunity for banks like CAL Bank.

Despite global economic uncertainties, Ghana's banking sector has shown resilience, with banks adapting to changing market conditions. The central bank's measures to maintain liquidity and stability amid economic fluctuations have played a crucial role in sustaining investor confidence within the sector.

Rationale Behind the Deal

The decision to sell CAL Bank's stake was strategically aligned with DPI's objective of unlocking substantial returns for its investors while providing CAL Bank with an opportunity to grow under new ownership. Arise BV, with its established base in the African financial sector, is poised to leverage its resources and expertise to further enhance CAL Bank's growth trajectory.

As the financial services landscape in Ghana continues to expand, this transaction positions CAL Bank to attract additional investment and innovation, enabling the bank to bolster its service delivery and market competitiveness.

Investor Overview

Arise BV was established in 2016 as a partnership between Norfund, Rabobank, and FMO, aimed at contributing to the sustainable development of Africa’s financial sector. With a presence in over 20 African countries and assets totaling US$660 million, Arise is committed to fostering long-term growth potential in the region.

The partnership is anchored in a shared vision of supporting local financial institutions, emphasizing growth opportunities that align with regional developmental goals. Arise’s investment philosophy is focused on collaboration, utilizing its expertise to enhance the capabilities and strategic direction of the banks it partners with.

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This transaction represents a strategic and timely exit for DPI, reflecting a successful partnership with CAL Bank that has yielded impressive returns despite challenging market conditions. The alignment with Arise BV provides CAL Bank with the necessary support to navigate the evolving financial landscape in Ghana, ensuring sustained delivery of value and growth.

From an investment perspective, today’s environment presents numerous opportunities for financial institutions in Ghana, particularly with the increasing demands of the emerging middle class. Hence, investing in CAL Bank under Arise’s stewardship is likely to yield positive outcomes that benefit both stakeholders and the broader economy.

However, prospective investors should remain cautious of the competitive nature of the financial services sector and the need to continually adapt to regulatory changes and consumer behavior. Nevertheless, the solid foundation established by CAL Bank, combined with its new partnership, positions it for promising growth and success in the future.

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