CAK Approves KCB Riverbank Acquisition With Conditions

The Competition Authority of Kenya (CAK) has allowed the proposed acquisition of control of Riverbank Solutions Limited by KCB Group Plc, but this is dependent on stringent terms regarding access to customer data and the satisfaction of contractual obligations.

The approval follows a full merger analysis conducted under the Competition Act, CAP 504 of the Laws of Kenya, after the transaction met the statutory threshold for mandatory notification.

In a statement outlining its decision, the Authority said the approval was “subject to compliance with conditions relating to customer data access and processing, as well as honoring existing contractual obligations with the target’s customers.”

The proposed transaction will see KCB Group acquire 75 percent of Riverbank’s issued share capital, alongside an internal reorganization that will ultimately place the business and assets of Zed Payments Limited under KCB Group’s control prior to completion.

KCB Group Plc, the acquiring undertaking, is incorporated in Kenya and is listed on the Nairobi Securities Exchange, with a cross-listing on the Dar-es-Salaam Stock Exchange.

The group operates as a non-operating holding company, and, through its subsidiaries, provides a universal portfolio of financial services.

The services includes; corporate and retail banking, digital financial services, bancassurance, investment banking, and asset management.

Transaction Structure and Strategic Rationale

Similarly, the target undertaking, Riverbank Solutions Limited, is incorporated in Kenya, focused on the development of technology platforms that facilitate financial transactions.

Its areas of expertise include the provision of unified terminal management systems, which aim to ease the processes involved in agency banking, enterprise resource planning, and revenue collection solutions within both the public and private sectors.

According to the parties, the acquisition aligns with KCB Group’s strategic objective of enhancing its digital capabilities to improve service delivery, particularly for micro, small and medium enterprises.

Riverbank stated that the transaction “presents an opportunity to deepen its existing partnership with KCB Group, scale its financial technology platforms, strengthen digital infrastructure, expand its customer base, and accelerate innovation.”

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Competition Analysis and Relevant Markets

CAK determined that the transaction qualifies as a merger under sections 2 and 41 of the Competition Act, which defines a merger as occurring when an undertaking directly or indirectly acquires control over another business in Kenya.

Additionally, considering that the total turnover or total assets of both firms were above Ksh. 1 billion, full analysis of the transaction in terms of the Competition (General) Rules 2019 provisions would be necessary.

While examining the competitive effects, the authority found the existence of vertical overlap, as the parties served the market at different levels.

Riverbank works within the upstream market, providing FinTech services.

Its main activities include providing infrastructure software for the processing of digital payments.

KCB, on the other hand, works within the downstream market, providing agency banking services.

While examining the market, the authority found out that the entities operated within the national market.

Both entities provide their services within the country.

FinTech and Agency Banking Market Findings

CAK observed that the Kenyan FinTech market is competitive and fragmented on the supply side, with a total of 102 FinTech firms in Kenya as of 2023, representing 15 percent of Africa’s FinTech start-ups.

While the ecosystem is worth an estimated value of approximately Ksh.452 billion in 2024, Riverbank’s market share is about 0.04 percent of the overall market, with competitions from several players in the industry, such as Craft Silicon, Cellulant, Tracom Solutions, and Finserve Africa.

As far as the downstream side of agency banking is concerned, it has increased considerably since 2010.

As of 2024, it has reached an estimated KES 1.83 trillion in terms of transaction values.

Data compiled from KCB indicates that KCB Bank Kenya Limited has an approximate 26.52% market share of agency banking in terms of number of agents.

Therefore, it was established that it is unlikely to prevent or lessen competition in agency banking.

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Data Safeguards and the Public Interest

However, some key issues raised included the vertical integrational risks associated with data-driven advantages, the disruption in the revenue contracts between the companies and the county governments in Makueni, Kitui, and Baringo.

It warned that competition concerns could arise if third-party data processed through Riverbank’s platforms were used beyond operational necessity.

In its determination, the Authority approved the transaction on condition that “all third-party transactional, customer, or merchant data remain ring-fenced and are not shared, accessed, or utilized” beyond Riverbank’s operations, and that existing customer contracts are fully honored.

CAK also confirmed that the transaction would not result in job losses, stating that all current employees will be retained under existing terms, satisfying public interest considerations.

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