Equity firms sell Family Bank stake to KTDA, Laptrust

Three private equity funds have sold a 22.3 per cent stake in Family Bank to Kenya Tea Development Agency and the pension fund for local authorities, Laptrust, more than two years after the funds bought the stake for Sh916 million.

The funds — Tunis-based AfricInvest, Netherlands’ FMO and Norway’s Norfund — sold the stake for an undisclosed fee to KTDA and Laptrust ahead of the lender’s Sh1.25 billion rights issue.

Family Bank shares were trading at an average of Sh35 in October over the counter, valuing the 22.3 per cent stake (52.7 million shares) at Sh1.84 billion.

Laptrust will own 7.3 per cent (10 million shares) and KTDA 15 per cent (42.7 million shares), making the tea agency the second largest shareholder in Family Bank after the Muya family that has a combined stake of  more than 30 per cent.

The PE funds linked their exit to a good offer from the new owners and fear of being barred from selling part of their shares for a period once the bank lists at the Nairobi Stock Exchange (NSE).

“We made a decent return on the investment we made as well as created value to the bank over the two years,” said Skander Queslat of AfricInvest. “PE players work under constraints determined by the life of a fund that involves seeking funds, investing and exiting within a set time. With Family Bank’s strategy to list at the bourse, we felt that it was the right time to exit since we may get locked in once that time comes.”

Family Bank has announced plans to list at the NSE within two years and the capital markets regulators normally prevents major shareholders from abandoning ship or selling part of their holding within a period ranging between one and five years of going public.

Initially, the PE funds had expressed their intention to exit the bank after five years with the sale of their stake to the Kenyan public through the Nairobi bourse.

The nearly Sh1 billion injected into Family Bank by the PE funds was used to boost the bank’s IT infrastructure and shore up its capital base to enable it tap into the lucrative homes market and corporate banking.

Family Bank has modelled its business around micro-finance, but is now seeking to widen its offering to include home loans and corporate banking which offer big ticket lending at relatively lower cost.

The Central Bank of Kenya places Family Bank’s market share at 1.34 per cent compared to Barclays (8.90 per cent), Equity (9.98 per cent) and KCB (14.52 per cent). The bank has reviewed its executive suite and boardroom over the past 18 months in search of talent that will help it achieve this goal.

This culminated in the hiring of Peter Munyiri as CEO from KCB Group last June and appointment of Wilfred Kiboro as chair of the bank. Mr Kiboro was previously the chairman of Standard Chartered Bank. 

KTDA is the marketing agency for an estimated 565,000 small scale tea farmers, and controls more than Sh61.4 billion annually. The agency has been diversifying its business and operates a microfinance company (Greenland Fedha), an insurance firm (Majani Insurance Brokers), packaging business (Ketepa) as well as warehousing services.“In line with our ongoing revenue diversification, we took the strategic decision to invest in Family Bank,” said Peter Kanyago, the KTDA chairman adding that they would make more investment in others banks.
Laptrust managing director Hosea Kili said he was confident of the investment in Family Bank .

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