Jamii Bora Bank targets Sh500m from rights issue

Jamii Bora and the Scandinavian Group, for example, bought into the bank with an eye on the licence—which allows it to tap deposits to grow their lending business.

Previously, Jamii Bora relied on bank borrowing to serve its lending that was targeted at the bottom end of the market.

It also lost some its former clients to commercial banks after turning their businesses around.

“For that reason Jamii Bora has taken the decision to become competitive with those banks so it can keep its successful members,” said Jamii Bora in a brief to partners last year.

This set the stage for the battle for control of the bottom end of the market placing Jamii Bora Bank in a head-to-head contest with Equity and Family Finance banks.

For BAF, having the bank sit on its portfolio was a major catch since the investment firm had been desperately angling for a piece of the lucrative banking market.

Analysts reckon that City Finance Bank was a good buy, arguing that the bank has plenty of room for growth despite it’s under performance.

It posted a loss of Sh7 million in 2009 compared to a loss of Sh3 million a year earlier.

People familiar with BAF say the investments group is looking to turn around the bank and exit either through an IPO or private equity transaction, which promises to offer outsized gains to the fund rekindling the transformation of Equity Bank, which minted a club of millionaires after its listing in 2004.