Equity Bank has lent Sh3.8 billion to owners of Nairobi’s Village Market to fund the expansion of the shopping mall.
The huge loan is the latest move by the bank to grow its presence in the lucrative corporate debt market.
The bank, which grew on the back of the retail mass market, has in recent years made forays into corporate lending to deploy its deposits that stood at Sh194.6 billion in December.
Equity’s recent big loans include Sh5.6 billion lent to Kenya Power and Sh1.5 billion to Rift Valley Railways.
Greenhills Investments, the owners of Village Market, disclosed that it had taken the loan from Equity to fund the expansion of the retail complex.
The money will be used to pay Seyani Brothers, a contractor appointed to build new facilities and expand existing units.
The expansion will feature construction of new retail outlets, conference halls, a 187-room hotel and a 600 capacity car park, among others.
Tenants at the property include supermarket chain Nakumatt, restaurants, banks, and Tatu City. The expansion underlines the rising demand for goods and services among the country’s rich and middle-class households.
Village Market is popular with the surrounding community including Kenyans and expatriates living in Runda, Gigiri, and Nyari estates.
For Equity Bank, the move to advance large loans is in line with its strategy of reducing reliance on its founding model of high-volume low-value loans to individual borrowers.
Nearly half of the bank’s outstanding loans are now held by small- and medium-sized firms, with the lender also aggressively growing its presence among big corporate borrowers.
“Management expects to sustain average growth riding on SME business which now accounts for 46 per cent of total book up from 41 per cent in 2009,” Standard Investment Bank said in a statement.
Analysts say corporate lending is more lucrative since it has relatively few defaults and lower administration costs.
Besides targeting major borrowers, Equity has also expanded in the regional market.