Family Bank has indicated plans to raise Sh4 billion through a rights issue planned for later in the year in its efforts to boost capital ratios and fund expansion.
The lender’s shareholders on Friday gave the go-ahead to the planned issue at an annual general meeting held at the KICC in Nairobi.
Family Bank chairman Wilfred Kiboro said the additional funds would enable them expand both locally and in the region as well as to maintain its capital adequacy ratios beyond the legal requirement. “We will be asking our shareholders to pump in Sh4 billion…that will result in our adding an additional 200 million new shares to be offered by way of rights issue to be able to raise the Sh4 billion,” he said on the side-lines of the AGM. The additional funds will be essential to the implementation of the lender’s growth strategy, which involves going regional.
As part of the planned regional expansion process, Mr Kiboro said the bank’s shareholders had given a nod for the setting up of a non-operating holding company. “We will be changing our name from Family Bank Limited to Family Bank Group PLC, which will be a non-operating company, which will then own a subsidiary which will be known as Family Bank Kenya Limited,” he said. The process is however subject to regulatory approvals and is expected to take about four to six months to be completed. The mid-sized bank has resorted to a mix of equity and debt to bankroll growth.
The latest planned rights issue comes shortly after a Sh3.1 billion cash call in the fourth quarter of 2014.The bank raised Sh977 million in 2010 followed by a Sh1.1 billion cash call in 2012 and a further Sh435 million from existing shareholders the following year. It also recapitalised Sh557 million in 2013 through a bonus share offer. Last year it raised Sh2 billion through a bond issue that currently trades at the Nairobi bourse.
Last week the lender said it had received a Sh3.42 billion (€30 million) loan from the European Investment Bank (EIB) for onward lending to small and mid-sized businesses. The bank will receive an additional Sh1.14 billion a month from now.
The increase in funding it said will support its growth target as the facility has its eyes on becoming a top-tier bank.
During the Friday AGM, Mr Kiboro abased fears over the lender’s liquidity position. He remarked that the Bank was in a very strong position and had weathered the ongoing turbulence in the banking sector.