As key shareholders plan to exit DFCU Bank, other changes are also taking place. The latest is that one of an influential director on the bank’s board, Deepak Malik has resigned his position, further complicating matters.
Deepak Malik serves as the Chief Executive at Arise B.V. He also serves as the Head of Department – Financial Institutions and part of the management team at Norfund.
Arise B.V. first acquired a majority stake of over 50 percent in dfcu Limited, the holding company of dfcu Bank after lending US$50 million in February 2017. The money was to help DFCU Bank meet its short-term capitalisation needs after it controversially took over Crane Bank in January 2017.
Arise B.V. acquired the stake in DFCU Bank from two previous largest shareholders of DFCU Bank-Rabo Development B.V and Norfinance AS (Norfund) which had a 27.54 percent stake each to become the largest majority shareholder in DFCU Bank.
The South Africa-based company was to support DFCU Limited via long-term investment in the bank’s growth ambitions, especially to enable the bank to improve its market position and efficiencies especially after acquiring Crane Bank Limited in a deal many analysts believe had financial flaws.
Malik’s resignation as a non executive director means the DFCU board is now left with five other non-executive directors led by All Elly Karuhanga as Chairman. Others directors are; Albert Jonkergouw, Winifred Tarinyeba- Kiryabwire, Frederick Kironde Lule and Michael Alan Turner.
Analysts say the Malik’s decision to resign confirms reports that Arise B.V. intends to leave especially that Britain’s Commonwealth Development Corporation (CDC) Group intends to exit, following DFCU Bank’s controversial acquisition of Crane Bank Limited in January last year at only Shs200 billion yet Crane Bank had assets worth over Shs1 trillion.
Reports indicate that CDC is leaving for various reasons which include poor economy but some sources say CDC wants to dodge paying taxes on its dividends. Other sources intimated to local news site Eagle that top executives at Arise B.V. decided to plan exiting DFCU Bank in fear that CDC was leaving them trouble, they being new and majority shareholders of DFCU Bank.
The contents in CDC’s exit letter
The letter confirming CDC’s plans to exit DFUC Bank reads in part: “After a period of over 50 years as a shareholder, it our aspiration to exit in a manner that causes minimum disruption to the business and ensures the orderly trading of DFCU’s shares. Further, CDC’s objective is to identify like-minded investors who could support DFCU in its new phase of growth. CDC is of the view that the bank will continue to succeed with the support of Arise B.V., its majority shareholder.” The letter addressed to Karuhanga on June 14, 2018.
CDC in a letter, says partly that it had previously discussed the sale of its shares with Karuhanga as DFCU chairman. The shares, according to the letter, may be sold in short and medium term.
“With the knowledge of the company and Arise B.V., we have held preliminary discussions with a small number of potential investors.
Two of those potential investors, Cranemere Africa Limited and responsibility Investments AG (the Strategic Investors), would like to be formally introduced to DFCU’s board and move into a due diligence phase. We therefore request that DFCU’s management support the due diligence process with the Strategic Investors.
Clearly all discussions and disclosures should be subject to confidentiality agreements between DFCU and Strategic Investors and should take place within the regulatory framework set by the Uganda Securities Exchange and the Capital Markets Authority,” the letter reads in part.
According to Irina Grigorenko-CDC’s investment director who wrote the letter, no transaction has yet been approved by its investment committee. Any decision by CDC to sell its shares in DFCU would be subject to the approval of the investment committee of the terms of the sale as well as the agreement of legal documentation.
Financial analysts say with the on-going investigation of the Bank of Uganda top executives over the sale of Crane Bank and others like the National Bank of Commerce, big shareholders of DFCU are spending sleepless nights. The situation is made worse as the case is also in court.
Back to Malik
Mr. Malik joined Norfund as an Investment Director in 2003 where his efforts were spent in promoting Norwegian investments in Southern Africa and the region.
He was previously the Regional Director of South Africa at Norfund. He has started his career at SIEMENS (India) in 1982, after which he opened a private consultancy in 1984, specialising in financial services. He was then appointed as audit manager for KPMG in 1988, following which he became Financial Director for ZAL HOLDINGS (Ltd) – a subsidiary of Zambia Consolidated Copper Mines Limited.
In 1993 he became the Financial Controller for Mulungushi Investments and in 1994 was appointed as the Manager Operations Accounting. In 1995 he was appointed General Manager for Group Procurement. Mr. Malik was responsible for the regional office for Africa. He served as an Acting Head of Department Financial institutions and SME at Norfund.
He also served as the Regional Representative at The Industrialization Fund for Developing Countries, of Denmark. Previously, Mr. Malik’s vast experience included his roles as a Managing Director and Chief Executive Officer at the Development Bank of Zambia, as a General Manager at Zambia Consolidated Copper Mines and as an Audit Manager at KPMG. He serves as the Chairman of AfriCap Microfinance Investment Company. He is on the Board of Directors of various companies, including financial institutions and private equity funds.
He is a Non-Executive Director of Real People (Pty) Ltd. since July 20, 2011. He serves as a Non-Executive Director at Equity Group Holdings Limited. He is a Non-Executive Director of Equity Group Holdings Limited since April 29, 2015. He had served as a Non-Executive Director of Real People Investment Holdings Limited since May 28, 2015. He served as a Board Member of Norwegian Microfinance Initiative.
He served as a Director of NMBZ Holdings Limited and NMB Bank Limited from January 31, 2014 to October 22, 2014. He is also the Head of Financial Institutions Department of Norfund, covering Africa, South Asia and Central America.
He is also part of the Executive Management team of Norfund. He has over 35 years’ experience and has a diverse experience in general management, development banking, banking, private equity, audit, microfinance, corporate and public finance, project financing, financial restructuring and privatization in emerging markets, mining, procurement and financial management.
His specialization is working with multilateral/bilateral financial institutions and he also has an extensive knowledge of developing countries. He is a qualified Chartered Accountant. He holds a Bachelor of Commerce (Honors) from the University of Delhi, India.