Victoria Commercial Bank finalized a debt swap agreement to acquire a 24.89% ownership stake in Montessori Learning Centre Limited, a Nairobi-based kindergarten, following the institution's failure to repay outstanding loans. The transaction, approved by the Competition Authority of Kenya (CAK), represents a rare instance of a financial institution acquiring equity in an educational entity.
The deal emerged after the school defaulted on its loan obligations, prompting the bank to avoid public auction proceedings. A bank director confirmed the arrangement was structured as a debt-for-equity swap, aligning with Central Bank of Kenya (CBK) exemptions for distressed asset acquisitions. CAK director-general Wang’ombe Kariuki stated the authority had authorized the transaction in a Kenya Gazette notice.
Montessori Learning Centre, established in 1998, operates under a British curriculum for early childhood education and offers teacher training programs. The bank's investment marks a strategic shift from its traditional corporate lending focus. Victoria Commercial Bank, which reported a net profit of Sh511.9 million in 2020, has not disclosed the financial terms of the deal.
While the Banking Act and CBK prudential guidelines restrict banks from holding stakes exceeding 25% of their core capital in non-financial entities, the debt swap structure circumvented these limitations. The bank currently holds a 24.52% stake in Victoria Towers Limited, which houses its headquarters in Upper Hill.
The institution, originally founded as Victoria Finance Company in 1996, transitioned to a banking license after the CBK issued its charter. Its late founder, Kanji Damji Pattni, passed away in February 2020 while serving as a non-executive director.
