Global ratings agency Moody’s has endorsed Absa Group’s plan to increase its stake in its Kenyan subsidiary, saying the transaction is credit positive as the South African lender deepens its presence in one of Africa’s fastest-growing banking markets.
The agency said the banking gaint’s proposed R4 billion acquisition, which would increase its holding in Absa Kenya to 85 percent from 68.5 percent, carries relatively low execution risk because it expands an already established and profitable business rather than entering a new market through a greenfield investment.
“The additional stake will allow Absa Group to capture a larger share of earnings from Absa Kenya, which has strong profitability and growth prospects,” Moody’s said in a note last week.
The firm expects the transaction to become earnings accretive over time, supported by Kenya’s favourable macroeconomic outlook and growing demand for credit.
Moody’s said the deal would strengthen Absa’s exposure to one of
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