Crane Bank sale talks deadlocked over Ushs 60Bn valuation dispute

October 7, 2016 in Business, Companies, Financial Services, Investment, Trade & Industry by Editor

KAMPALA,OCTOBER 7 – Ongoing talks between Ugandan property mogul Sudhir Ruparelia and the Mara Group over the latter’s planned acquisition of a stake in Crane Bank have run into obstacles after the parties failed to agree on the value of the bank.

Crane Bank is trying to bring a strategic investor on board as it struggles to meet its capital adequacy requirements in the wake flagging business and a sharp rise its non-performing portfolio. Crane Bank is hobbled by close to $90 million of impaired loans, a hole the shareholders are supposed to fill with a new capital injection.

256BN has now learned that much as the Mara group is keen to extend its African footprint by having a presence in Uganda, negotiations with Crane Bank are yet to resolve discordant views over the bank’s true value. The parties are understood to be haggling over some UGX60 billion ($17.4m) that Sudhir wants included in the assets of the bank while the Mara Group believes otherwise.

Sources familiar with the negotiations say whereas Sudhir believes that his bank is worth $300m, the Mara Group see a fair value somewhere closer to $250million.

In a related development, analysts are waiting to see if last week’s confession of near bankruptcy by highly billed Ugandan Asian Ashish Thakkar the Mara Group founder and Chairman could impact the groups’ bid for Crane Bank.

Under commercial law, a person that is declared bankrupt forfeits the right to hold directorships in any business entity until he is absolved of the bankruptcy.

Ashish, previously believed to be worth $260 million stunned the world last week when in  divorce proceedings in London, he confessed to have hyped his true net worth saying it was now time to tell the truth and that he was worth no more than 400,000 pounds sterling which translates into just a little over $0.5 million.

Regardless of whether he was making these statements to avoid a hefty divorce settlement, the confession would dramatically change Ashish’s fortunes and ratings as he will effectively only be able to conduct his business through proxies or other underground operations.

It also remains how much of a property mogul; Sudhir will remain, if it turns out that he has been financing his aggressive development of seized collateral using the bank’s resources. If the new shareholders call these loans, Sudhir would either have to find money offshore or be forced to sell these properties at a fraction of their value which would effectively trip his profile.