Jamii Bora eyes Sh5bn in funds drive

Jamii Bora Bank plans to raise Sh5 billion through a mix of options, which include new shares to a strategic investor, convertible debt and a rights issue.

The lender said it was looking to raise Sh3 billion by ceding shareholding to a new investor combined with a convertible debt of Sh1.5 billion. It also plans to ask its current owners to inject an additional Sh500 million through a rights issue.

“The directors be and are hereby authorised to raise additional share capital of an amount not exceeding Sh5 billion. The share capital will be raised in a manner and from such person or persons and on terms and conditions in respect the board may deem fit including convertible debt, private placement, strategic investors and a rights issue,” reads a notice of an extraordinary general meeting scheduled for November 10 seen by the Business Daily.

The bank’s management has recommended the creation of 20 million shares, valued at Sh66 each.

A maximum of 6,250,000 shares will be available to investors who lend the bank Sh1.5 billion. The conversion of the debt will be effective five years after its disbursement. The debt arrangement implies the bank expects its shares to be valued at least Sh240 each after the five-year period.

“The strategic investor will be such a person who will inject the cash required to scale up the bank’s business through investments in technology, bank subsidiaries, branch network etc and who will bring on board a commercial value that will contribute towards the bank achieving its five-year strategy of scaling up business,” reads the notice.

The bank has been on an ambitious growth path that has seen it conduct two rights issues and issue a five-year convertible bond of Sh1 billion in the last four years. Holders of the bond converted it to equity last year following shareholder approvals.

Last year, it also invited private equity fund, Catalyst Principal Partners, as a strategic investor whose shareholding is estimated at 13 per cent.

In an interview with Business Daily last month Catalyst indicated that it was ready to inject more investment in the bank if opportunity arose.

“We have built our stake to just over 10 per cent and we are happy with the investment, management and if the opportunity presents itself we will be delighted to increase our stake and continue to provide funding,” said the chairman of the investment committee at Catalyst Andrew Reicher.

The bank has been aggressive since the entry of new investors, Asterisk Holdings, in 2011. Asterisk is owned by Jamii Bora chief executive Samuel Kimani and chief commercial officer Tim Kabiru, who had worked together at executive level at KCB before taking early retirement.

Other shareholders of the bank include Jamii Bora Scandinavia AB (JBSAB) of Sweden and Nordic Microcap Investment.

The entry of the new investor saw a turnaround to profitability by the bank in 2012 having recorded losses between 2005 and 2011. 

The bank has remained in the black ever since but has posted a drop in profit this year. The managers attributed the fall in profitability to capital investments.

The lender has been opening new outlets with its current network being more than 24 branches.

It has, however, been limited in booking of large loans due to low capital levels. The central bank limits a bank lending to a single borrower to 25 per cent of its core capital.

As at end of last year it had a core capital of Sh2.4 billion, meaning that it cannot lend to a single borrower anything exceeding Sh300 million.

The story has been edited to reflect that Tim Kabiru is the chief commercial officer.