Family Bank seeking to raise Ksh.4Billion in a rights issue

Family Bank seeking to raise Ksh.4Billion in a rights issue

posted on May 4, 2016

Family Bank is seeking to raise more funds through a rights issue as it eyes great opportunities beyond Kenya.

The lender is seeking to raise Ksh 4Billion – not only to ensure it stays way above the statutory enhanced capital ratios but fund its growth strategy which it has pursued for the past five years. This will be the fifth cash call by the bank in six years. In 2014 the Bank raised Ksh 3.1Billion; Ksh 977Million in 2010 followed by Ksh 1.1Billion raised in 2012.

The cash call has been prompted by the unprecedented growth realized by the bank. Last year the lender was feted for being the fastest growing Bank in Kenya.

“The cash call is part of the financing options the Bank is pursuing to support the growth momentum and meet statutory ratios. We are considering both equity and debt financing to maintain our fast paced but sustainable growth.” said the bank’s Chairman – Dr. Wilfred Kiboro.

“We are encouraged by the strong support from our shareholders. They are ready to support the rights issue informed by the direction the bank is following. For now we consider the rights issue a faster and preferred option even as we mull over other financing options from international financiers and development financial institutions” says Managing Director & CEO-Mr. Peter Munyiri.

The Bank is pursuing a multi-pronged capital raising strategy – a mix of debt and equity – as part of the lender’s five year capital raising plan. Last year the Bank raised Ksh 2Billion through a corporate bond that is currently trading at the Nairobi Securities Exchange.

This week the Bank received Ksh 3.42Billion (30Million Euros) from European Investment Bank(EIB) to provide lower-cost long term loans to small and medium sized businesses in Kenya. This is the second tranche by the European lender – with the first tranche of Ksh 2Billion having been secured two years ago. The funds which are ready for disbursement – come several months after the lender secured a similar facility of Ksh 1 Billion from a Netherlands Financier – Oiko Credit International. Oikocredit East Africa is a subsidiary of Oikocredit International headquartered in Netherlands.

The third tranche of Ksh 1.14Billion is expected in a months’ time. Coupled with the Ksh 2Billion disbursed two years ago and the latest funding of Ksh 3.42Billion, it will bring the total facility so far secured by Family Bank to Ksh 6.6Billion. The bank aims to become a top-tier lender soon and sees the increased funding as key to supporting its growth targets.

The Bank is increasing its local footprint – now at 92 outlets with 8 more branches slated for opening to reach the 100 mark by end of this year. The branches soon to be opened include JKIA, Wangige, Kutus, Eastleigh, Isiolo, Tea Room, Kenyatta University UNI-City and Kondele.

It is also expanding its agency banking model, targeting a total of 10,000 agents by end of the year. Currently the bank has more than 4,000 active agents.

“We are angling for a larger share of the lucrative SME, corporate lending market to give us a strong competitive position. We remain confident of realizing premium returns to shareholders’’, added Mr. Munyiri