A few days after it emerged that management of the Agricultural Development Bank (ADB)had signed a Memorandum of Understand(MOU) with Atlas Mara Limited to cede 25 percent of the bank’s shares to the company for 50 million dollars, a similar deal has also surfaced.
[contextly_sidebar id=”e3KePI5fTtCCEPJVjmw8TpnoYECq9uiD”]Documents cited by Citi Business News reveal another foreign equity investor has signed a MOU with the bank to purchase 15 percent of the bank.
The investors known as Norwegian Investment Fund (NORFUND) for Developing Countries /NorFinance AS are expected to buy for 15% of the bank during the IPO.
This brings to 40% the number of shares of ADB bank to be issued to foreign investors.
According to documents cited by Citi Business News NORFUND is demanding that prior to the execution of the transaction ADB must comply with certain Environmental, Social and Governance (ESG) related requirements or alternatively action plans to remedy any non-compliance which will be accessed by NORFUND during the due diligence.
According to the three page contract cited by Citi Business News which is dated 15th May 2015 the investment shall be completed either by Norwegian Investment Fund for Developing Countries (NORFUND) or the NorFinance AS or by a combination of both.
The final allocation will be determined prior to entering into a subscription agreement at the investor’s discretion.
The IPO, however is dependent on additional anchor investors to be fully funded and NORFUND requires full disclosure upon the acceptance of this term sheet, of the other anchor investors and NORFUND can terminate its involvement if the composition of the anchor investors is not acceptable to the FUND.
NORFUND in the document said their investment in ADB is subject to the approval of its investment committee and board of directors upon completion of the due diligence which is currently ongoing.
The investors NORFUND may require potential minority protection rights from ADB depending on selection and agreements with other anchor investors.
Upon execution of the transaction NORFUND shall be entitled to receive financial and the ESG related reporting within customary time limits.
An indemnification mechanism granted by ADB to the benefit of NORFUND will be, ADB shall indemnify NORFUND for any losses resulting from a misrepresentation or false representation deriving from any reduction in the net equity of ADB or any of its subsidiaries.
According to NORFUND as long as the investor has not withdrawn from the process or the IPO process have not been aborted, ADB may not actively negotiate with any other investor for NORFUND’s share of the IPO.
The MOU contract sheet Citi Business News has gathered is governed by and interpreted in accordance with the law of England.
By: Norvan Acquah – Hayford/citifmonline.com/Ghana