Capital Markets
Sh9.3bn rights issue to take Family Bank regional
Friday October 20 2023
Family Bank towers on Muindi Mbingu Street and Moktar Daddar Street, Nairobi County on March 22, 2023. PHOTO | DENNIS ONSONGO | NMG
Family Bank is eyeing regional expansion from the Sh9.3 billion it hopes to raise from its new rights issue, approved by its shareholders on Wednesday as it looks to fund its next phase of growth.
The lender is expected to offer its shareholders one extra share for every two held or a total of 643.5 million new shares at a cost of Sh14.50 apiece.
The rights issue kicked off on Thursday and closes on November 30 while the offer price represents a 10 percent discount on the six-month weighted volume weighted average price of the lender’s share price at the over-the-counter market.
Read: Family Bank to pay Sh798m dividend despite profit drop
Family Bank is expected to deploy proceeds from the right issue in funding its regional growth and new lending.
“The bank’s strategic intent is to become a tier I bank. This will be achieved through continuous investment in the bank’s six pillars of digital transformation, brand positioning, organic and inorganic growth and a key focus on people and IT infrastructure upgrade,” Family Bank told shareholders in a memorandum.
The lender is expected to expend Sh4 billion for regional expansion initiatives, signalling intentions to venture into new markets via a combination of either greenfield investing or mergers and acquisitions.
A further Sh2 billion is to be invested in IT infrastructure and new product initiatives while a further Sh3 billion will be used in supporting onward lending.
Family Bank began as a building society in October 1984 and became a fully-fledged commercial bank in 2007 via conversion of the society.
Currently, it operates a network of 93 branches, 5,900 agents and 144 ATMs spread across 32 counties.
The bank’s products and services are offered to a cross-section of customers in the retail, corporate, SME and micro sectors.
Family Bank staff total 1,729 with 49 percent being male while the majority at 51 percent are female.
The bank has an authorised share capital of Sh1.5 billion ordinary shares of Sh1 each while issued and fully paid shares total to Sh1.2 billion.
The Kenya Tea Development Agency Holding Limited controls 16.5 percent of Family Bank shares with other top institutional shareholders being Daykio Plantations Limited and Sanlam Securities with an ownership of 12.3 and 3.5 percent respectively.
Top individual shareholders include the estate of the late Rachel Njeri whose ownership stands at 13 percent, Titus Kiondo Muya, Brian Muyah Kiondo, Ann Muya, Mark Keriri and Sheila Kahaki Muya.
Combined, the 10 shareholders own 64.9 percent of the bank represented by 835.3 million shares.
In six months of operations to June, Family Bank realised a net profit of Sh1.4 billion and had a net asset base of Sh132.8 billion including a Sh84.6 billion loan book.
Read: Family Bank gets Sh1.5bn insurance for SME lending
Previously, Family Bank has relied on loan and finance agreements to fund growth and has existing credit facilities with Blue Orchard Microfinance Fund, REFFA Fund, and the Eco-Business Fund.
Locally, Family Bank has tapped the corporate bond market for financing.
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