Belo-Osagie Moves to Save Vine Capital/Afribank Deal
Category: Investors NewsBeat
May 30, 2011
The former Chairman of United Bank for Africa Plc, and one of the key promoters of Etisalat Mobile Communications, Mr. Hakeem Belo-Osagie, has moved in to save the deal between Vine Capital Limited and Afribank Plc from completely collapsing.
According to a bank official conversant with the transaction, the move became necessary following the move by a segment of the board of directors of the bank not to go ahead with the deal with Vine Capital.
Similarly, feelers from the Central Bank of Nigeria that it was not favourably disposed to the acquisition, following the regulator's recent scrutiny of some of the investors behind Vine Capital, have helped to jeopardise the transaction.
Afribank had signed a Memorandum of Understanding with Vine Capital and Phoenix Acquisition Company Limited in a bid to recapitalise the bank.
Vine Capital Partners is an emerging markets private equity firm with an interest in banking and financial services in sub-Saharan Africa.
The Vine Capital Consortium is made up of local and international firms led by the former Managing Director of Goldman Sachs Mergers and Acquisitions Unit in New York, Mr. Tosa Ogbomo, who had also been designated chief executive of Afribank Plc.
However, the bank executive said that Hakeem Belo-Osagie has stepped in to salvage the situation following a passionate appeal by, Tosa Ogbomo, who has been Belo-Osagie's family friend for decades, to intervene in the matter.
“Hakeem has actually reached out to many people involved in the impasse including the CBN governor, Malam Sanusi Lamido Sanusi, and is exploring the old school boys network as both of them are members of Old Boys Association of the famous Kings College, Lagos,” he said.
The Kings College old school boys network is extremely influential and most of its members, who have occupied high level positions in the public and private sectors, are known to back each other when the need arises.
The fact that Sanusi also worked in UBA at the time Belo-Osagie was its chairman and both men had a close relationship that has remained intact over the years is what might have encouraged the former bank chairman to intercede on behalf of Vine Capital.
The banker further stated it is not clear what the outcome of Belo-Osagie's involvement in the salvaging the deal will be, but noted that he might find it a tall order convincing the CBN governor to endorse the acquisition based on the facts at his disposal on Vine Capital.
CBN usually undertakes its own due diligence on such transactions before it gives the go ahead. One of its objectives is to ascertain the source of funds for the acquisition and the background of the investors.
“I can confidently tell you that the CBN is not disposed to the transaction, irrespective of the fact that it wishes the Afribank to be sold,” he said.
According to the executive, part of the reasons the CBN is sceptical about the transaction is because some old ghosts from the past are beginning to resurface, with Vine Capital being used as fronts for the deal.
Suspicion is rife that the former governor of Edo State, Chief Lucky Igbinedion, has had substantial interest (shares) in Afribank which he bought through proxies during the consolidation era in 2005 to 2006.
“I can confidently tell you that CBN from the onset was not comfortable with the deal but because of pressure from the presidency that has tacit support for Vine Capital, CBN was compelled to soft pedal a bit.
The president's Chief of Staff, Mike Oghiadome, who was Igbinedion's deputy governor for eight years, is alleged to have reached out to CBN to endorse the deal so that his former principal would increase his stake using Vine Capital as a conduit.
Also lending credence to this stand point of CBN, an insider in the apex bank who pleaded not to be mentioned told THISDAY that since the MoU was signed between Afribank and Vine Capital, the apex bank has been besieged with petitions against Vine Capital.
One of the key factors raised in some of the petitions include the link between the firm and Igbinedion, termed the 'Edo Connection'.
“And with the conviction and further prosecution of Igbinedion by the Economic and Financial Crimes Commission, the CBN is distancing itself from putting a seal on the deal.
Based on these developments, the board of Afribank, THISDAY learnt, has been divided on the matter, as some of the board members have been pushing for Vine Capital to sail through but those who were opposed to it were more in number and they carried the day.
“That was why there was a change in the board leadership recently that saw the arrow head of the antagonists to the deal, Ashim Oyekan, a board member, emerging as the new chairman, subject to the approval of the CBN,” said a source in Afribank.
If approved, Oyekan will be displacing Osa Osunde as the chairman. Osunde, incidentally, is Igbinedion's brother in-law and is believed to have represented the former governor's interest in the bank.
Other issues raised against Vine Capital, it was gathered, are that it does not have a local banking experience. That is to say that it has not managed a bank in the country before and therefore lacks local experience.
They also alleged that the firm was not registered in the country at the time of its pre-qualification for the bid.
However, another source has dismissed this as a misconception, explaining that Vine Capital was actually registered in 2009 in New York, USA.