Family Bank will list at the Nairobi bourse after the election when it will have a clear picture of the political transition and its effect on the stock market.
The bank, which began as a building society in 1984, wants to go public by introduction in the second quarter of next year— meaning it is not aiming to immediately raise cash from the sale of shares at the Nairobi Securities Exchange.
Going public, however, offers the bank’s shareholders a liquid forum to unlock the value of their shares.
“It has been noted historically that the economy usually picks up after a successful transition of leaders during national elections,” said chief executive Peter Munyiri.
“Since the election is most likely going to be held in March next year this is the period we are looking at listing.”
The bank added that its listing would consume less time since it has done due diligence and selected a lead transaction adviser, Dyer and Blair Investment Bank.
READ: Family Bank plans Sh1.5bn rights issue, targets NSE next year
Family Bank had planned to list last year but put the offer on hold due to the bearish run at the NSE that it felt would erode its market value.
The NSE dropped 28 per cent last year compared to a return of 36.5 per cent in 2010 and it has recovered marginally this year.
“We had to make a decision last year that despite having a listing date already secure going ahead with the plan would only have destroyed the value of the company instead of unlocking it,” added Mr Munyiri.
Firms that listed last year like TransCentury and British American have shed 52 per cent and 39.4 per cent respectively since their debut at the NSE.
On Thursday, its shareholders approved a plan to raise Sh1.5 billion through a rights issue that will see shareholders allocated a share for every six shares held.
Mr Munyiri also said that the bank would raise Sh3 billion from long term loans to finance its expansion. The bank plans to open 20 new branches this year, pushing its network to 85 outlets.
It is also seeking a piece of the agency banking business by tapping 300 agents before the end of the year to spread its reach without bearing heavy costs.
It is also planning to set up a subsidiary in South Sudan this year in a joint venture with investors in the newly independent State.
The bank’s plan to list aims to boost liquidity and offer its investors an exit route.
Last year, Tunis-based Africinvest, Netherlands’ FMO, and Norway’s Norfund made a joint equity investment of Sh1 billion in the bank that gave them a 22.4 per cent stake.
Its net profit dropped marginally to Sh354.6 million last year from Sh354.69 million in 2010 on high operating expenses that grew to Sh3.24 billion from Sh2.6 billion.
Mr Munyiri said the bank is counting on new product lines, expansion to new markets, and increased capital to return to profit growth.
The bank, whose products have targeted the low-end of the market, aim at widening its product offering to include home loans, corporate banking, and forex trading with focus on corporate lending.
A stronger Family Bank is looking to lend more to companies and big ticket projects in the property market to grow its lending book and push it to the top tier of Kenya’s banking sector.
Central Bank of Kenya places its market share at 1.3 per cent compared to Kenya Commercial Bank (14 per cent), Barclays Bank (8.3 per cent), and Equity Bank (8.8 per cent).
Family Bank has tapped former executives of top tier banks as it seeks to replicate their business model in what could raise the stakes in the lending market.
Human capital has become the most sought after resource for market share growth in Kenya’s banking industry where business ideas are being copied with speed, sparking a talent war.
Family Bank has been modelling its strategy on that of Equity Bank, which has upset Kenya’s conservative financial sector with the rollout of products that are popular with the low-end of the market, which has traditionally been considered high risk.