KWFT to sell 25pc stake to European funds

What you need to know:

KWFT will create new shares — adding up to a quarter of the institution’s share capital — that are expected to be taken up by Rural Impulse Fund, a Luxembourg-based firm, and NMI AS from Norway.

The Kenya Women’s Finance Trust (KWFT), a microfinance provider, is to sell a 25 per cent stake to two international development institutions in a move that is designed to bring the lender’s shareholding in line with regulatory requirements.

Sources told BDAfrica.com that KWFT will create new shares — adding up to a quarter of the institution’s share capital — that are expected to be taken up by Rural Impulse Fund, a Luxembourg-based firm, and NMI AS from Norway.

Earlier this month, Kenyan Women Holdings — the largest shareholder in KWFT — appointed NIC Capital as the transaction adviser for the planned sale of its shares, saying it would release more details next month.

NIC managing director Maurice Opiyo expects the sale structure to be finalised within a month whereupon the price per share will be set.

KWH has gradually been reducing its stake in the micro-lender. Earlier in the year it sold a 25 per cent stake to two strategic investors to comply with the Central Bank of Kenya ownership rules.

The regulator only allows banks and other financial institutions to own more than 25 per cent stake in deposit-taking microfinance (DTM) institutions.

READ: KWFT cedes 25pc stake to comply with banking rules

Kenya Women Holdings is a non-profit organisation. CBK gave non-banking institutions up to four years to comply with the new laws that came into effect in 2006.

The entry of the two overseas investors would be a boost for the lender, which has seen its capital come under pressure from new Central Bank regulations.

Treasury Secretary Henry Rotich said in a Kenya Gazette notice dated July 15 that DTMs should reserve 5.25 per cent of their deposits at the Central Bank.

“In the exercise of the powers conferred by section 38(6) of the Central Bank of Kenya Act, the Cabinet Secretary for the National Treasury prescribes for purposes of section 38 the microfinance banks set out in the schedule below to be subject to the cash reserve ratio,” said Mr Rotich.