Kenya Airways set to sign Sh7 billion loan deal with IFC
The World Bank’s private lending arm, the International Finance Corporation, is set to sign a Sh7 billion loan deal with Kenya Airways, deepening its financial interest in the national carrier. Photo/FILE
What you need to know:
IFC is Kenya Airways’ third largest shareholder with a 9.56 per cent stake acquired during the airline’s rights issue, which was concluded in June.
Mr Prosper said the KQ deal — which was first announced at the beginning of this year—is part of a larger pipeline of Kenyan financing deals worth Sh34 billion ($400 million) that are set to be concluded by June next year.
Tanzanian airline Precision Air, which is partly owned by national carrier KQ, is also set to get between Sh340 million and Sh510 million ($4 million to $6 million) capital injection from the IFC.
The first round of cash is intended to go to financing pre-delivery payments for a fleet of nine Boeing 787-800 Dreamliner aircraft, with the first delivery expected in 2014.
Analysts have termed the investments being made by KQ as critical in supporting its growth plan. The airline’s stock at the Nairobi Securities Exchange is currently trading at about the rights issue price.
The World Bank’s private lending arm, the International Finance Corporation, is set to sign a Sh7 billion loan deal with Kenya Airways, deepening its financial interest in the national carrier.
Negotiations for the loan are already at an advanced stage, the outgoing IFC director for eastern and southern Africa Jean Philippe Prosper, said in an interview.
“We have agreed with Kenya Airways on the terms of the loan, but we have not signed it yet. We will do the signing in the next few months,” said Mr Prosper.
IFC is Kenya Airways’ third largest shareholder with a 9.56 per cent stake acquired during the airline’s rights issue, which was concluded in June.
The government is Kenya Airways’ largest shareholder with a 29.8 per cent stake. Dutch airline KLM owns 26.73 per cent of the national carrier.
Mr Prosper said the KQ deal — which was first announced at the beginning of this year—is part of a larger pipeline of Kenyan financing deals worth Sh34 billion ($400 million) that are set to be concluded by June next year.
Tanzanian airline Precision Air, which is partly owned by national carrier KQ, is also set to get between Sh340 million and Sh510 million ($4 million to $6 million) capital injection from the IFC.
It will give direct loans and take up private equity in companies in diverse sectors of the economy, said Mr Prosper.
IFC invested about Sh30 billion ($360 million) in Kenyan companies last year, out of a total Sh50 billion ($600 million) put in the five members of the East Africa Community trade bloc.
KQ hopes to raise billions of shillings in financing to expand its fleet.
The first round of cash is intended to go to financing pre-delivery payments for a fleet of nine Boeing 787-800 Dreamliner aircraft, with the first delivery expected in 2014.
Analysts have termed the investments being made by KQ as critical in supporting its growth plan. The airline’s stock at the Nairobi Securities Exchange is currently trading at about the rights issue price.
In a report, JP Morgan predicted a price target of up to Sh18 in the period to August next year, noting that there are risks to the price such as the Euro zone crisis expected to soften business and tourism travel. “We set a one-year target price for Kenya Airways of Sh18,” said the JP Morgan report dated July 27, 2012.
