The SIC-FSL, Belstar, ADB, UniBank Quandrant – The Facts Behind The News

On March 7, news broke that uniBank Ghana Limited had taken over the Agricultural Development Bank after a consortium of four institutional investors, led by Belstar Capital Limited, had pledged its shares and all the accompanying entitlements to the former.
Although uniBank has since sought to clarify the transaction with a press statement, information on the transaction remains sketchy, giving room for wild speculations and conclusions.

As it is the case with almost every transaction, the controversial uniBank-ADB deal has a history behind it.

But unlike many such deals, the one at hand smacks of one executed by a group of astute professionals who seem to know what they were up to right from scratch.

The genesis

In October 2016, when the second initial public offer (IPO) of ADB was regaining momentum, management of SIC Financial Services Limited (SICFSL),led by its Managing Director then, Mr Abraham K. Boateng, went with cup in hand, looking for funds to also buy some of the shares.

So juicy was the offer that, Mr Boateng felt SIC-FSL, an investment advisory and brokerage firm, must not lose out by merely sitting on the fence.

The intention was simple: buy the shares, watch and study the stock market, resell after a few months and make some profit.

However, to participate and consequently make profit, SIC-FSL needed to borrow funds or liquidate some of its investments before it could raise the needed finances.

After skimming through the market,SIC-FSL settled on a GH¢61 million credit facility from Belstar Capital Limited to be used in purchasing the shares.

The details of the transaction were pretty clear: interest was 23 per cent, repayment in 60 days and the shares were pledged.

The decision of SIC-FSL and Belstar to agree to a pledge meant that upon non-payment of the facility, the borrower (Belstar) will fall on the shares and enjoy all the rights and privileges.

To help forestall any misapplication of the funds, the two further agreed that Belstar would transfer the funds directly to universal Merchant Bank (UMB), then the receiving bank for the IPO, without passing it through SIC-FSL’s accounts.

That too, was agreed and adhered to.

At the close of the IPO and the subsequent allotment of the shares, SICFSL’s purchase amounted to 10 per cent of ADB.

Up until this moment, the SICFSL board was yet to be notified of the transaction.

June 26 EGM

As fate would have it, the 60 days elapsed with SIC-FSL being unable to repay.

Consequently,Belstar encumbered the shares in line with the earlier arrangement after SIC-FSL had alerted
the Central Securities Depository (CSD) Limited.

Unknown to SIC-FSL, as Mr Boateng told GRAPHIC BUSINESS, Belstar had also bought some 24 per cent of ADB.

Together with the 10 per cent, Belstar now had 34 per cent, higher than the Government of Ghana’s 32.3 per cent.

Armed with its increased stake in ADB, Belstar called an extraordinary general meeting (EGM) on June 26, 2017, at which it made drastic changes to the bank’s regulations.

Key among them (primarily aimed to reduce government’s hold of the bank) included shifting the power to appoint the board chairman and managing director of ADB from the government to the board of directors.

The EGM also limited the number of board members the government could appoint to three and allowed shareholders with stakes up to 10 per cent to appoint persons onto the board.

BoG’s involvement

In July 2017, after the Belstar-inspired EGM, Mr Boateng said the Minister of Finance, Mr Ken Ofori-Atta, asked that SIC-FSL retakes its shares from Belstar.

Within the same period, the Bank of Ghana (BoG) told SICFSL in writing that its decision to forfeit 10 per cent in ADB to Belstar contravened aspects of the Banking Act, which stipulate that persons wishing to sell up to 10 per cent in a bank must first notify the BoG.

As a result, SIC-FSL asked the CSD to reverse the transfer of the shares to Belstar.

That notwistanding, the pledge on the shares meant that Belstar, not SIC-FSL could exercise right of ownership over them.

Alarmed by the sudden interest in the deal from the government and BoG, SIC-FSL management quickly brought the matter before the board and after deliberation, the board said “once there is a pledge on the shares, automatically, it belongs to the person who gave you the money to buy.”

It also rectified the transaction in line with corporate governance practice.

Two months window

After some deliberations with the government on the matter, it was agreed that SIC-FSL negotiates with Belstar for a payoff to enable the shares to be owned by the former.

Initially, Belstar was hesitant; however, it later softened its stance albeit conditionally – government had two months to buy it out of ADB.

Although a glimpse of what the government already wanted, the government was unable to meet the condition, resulting in Belstar remaining as a shareholder of ADB with its own 24 per cent and the 10 per cent still under pledge.

Around the same time, BoG raised the minimum capital of banks to GH¢400 million, prompting shareholders of banks to start a capital hunt.

The management of Belstar later agreed to lead a capital raising exercise for uniBank. The plan was to raise GH¢600 million in return for an equity stake in the bank.

This was when Belstar’s stake in ADB came in handy. Given that nStarmount Development Company, which owns six per cent of ADB, has almost the same shareholders as Belstar, it was easy to offload their combined stakes in ADB and reinvest the proceeds in uniBank.

But to make the arrangement more complex and put them in proper control, Belstar decided to bring on board EDC’s six per cent to give it a controlling stake in ADB capable of ‘taking over’ the agricbias lender.

This gave birth to the March 7 news report,which forced a denial of a takeover by BoG, suspension in the trading of ADB shares by the Ghana Stock Exchange (GSE) and the ushering in of a hazy cloud of corporate uncertainty over the future of adb.


Although government is yet to speak on the matter, it is obvious that the recent happenings threaten government’s plans for adb.

Key among them is the planned merger with the National Investment Bank to create the National Development Bank.

Beyond testing some laws governing the operations of businesses, the current controversy could represent a learning platform and maturing point for the country’s nascent capital market.

At the end, it should trigger reforms to help forestall similar occurrences and make it possible for investors to fully disclose the interest in companies that they may be aiding others to invest in.