KWFT cedes 25pc stake to comply with banking rules
Kenya Women Finance Trust (KWFT) is poised to cede a 25 per cent stake to a strategic investor who will inject cash and help the micro-lender comply with Central Bank’s shareholding rule.
The company said it is targeting to raise Sh1 billion from a social investor—fund owners keen on lifting the vulnerable from poverty—over the next year, valuing the lender at Sh4 billion.
The sale will cut the ownership of Kenya Women’s Holdings that owns 80 per cent of the financier to 55 per cent next year and to 25 per cent in 2014 through a public sale of its shares equivalent to 30 per cent to the public.
This will put KWFT within the Central Bank of Kenya (CBK) ownership limits that bar Kenya Women’s Holdings from owning more than a quarter of its shares. Employees of Kenya Women’s Holdings have a 20 per cent stake in the company.
“While the sale of the 25 per cent stake will raise capital for the company, it will help us comply with the CBK shareholding directive,” said Mwangi Githaiga, the managing director of KWFT, at the firm’s annual general meeting on Friday.
The banking law bars investors who are not banks, foreign finance companies or the government from owning more than a 25 per cent of Kenya’s banks.
The KWFT became the first microfinance institution (MFI) to gain permission from the Central Bank in 2010 to accept deposits for onward lending instead of relying on donors and commercial institutions to support its loan book.
The CBK had given Kenya Women’s Holdings till 2014 to keep its ownership at a maximum of 25 per cent.
The Sh1 billion it will raise next year will backed by an additional Sh2.5 billion it is seeking from creditors to support its expansion plan—which will see it grow its branches to 48 by 2014 from its current 18 units.
The restructuring of its shareholding and the expansion will mark a milestone for the micro lender started in 1981 by a group of women lawyers, bankers, and entrepreneurs to address the financial needs of women.
Its net profit dropped to Sh302 million last year compared to Sh321 million a year earlier and Sh676 million in 2009 mainly due to the cost of stringent regulations CBK attached to MFI’s converting to deposit taking lenders.
KWFT said it would create new shares to accommodate the targeted strategic investor, following in the path taken by companies such as Equity Bank, ScanGroup, UAP Insurance that have benefited from new capital and expertise from strategic investors.