Sidian Bank founders and individual shareholders received Sh841.66 million on sale of their entire stake in the lender, underlining foreign investors’ appetite for Kenya’s banking sector.
The lender discloses in its latest annual report that K-Rep Group Limited, an investment vehicle that founded the lender as K-REP Bank, joined KWA Multi-Purpose Co-operative Limited and nine individuals in relinquishing their combined 728,525 shares or 16.57 percent stake.
The shares were sold to Pioneer General Insurance Limited, Pioneer Life Investments Limited, Wizpro Enterprises Limited, Afrah Limited and Telesec Africa Limited.
This has changed the shareholder profile of the bank to institutional investors from a lender that had a significant share of individual owners such as Kimanthi Mutua —founder and first CEO of Sidian, then known as K-Rep.
The five new shareholders, who had on October 20 last year bought a 38.91 percent stake in Sidian from Centum Investment Company Plc, came for additional purchases, which saw them buy out the nine individual shareholders and two institutional investors.
Top shareholder Centum had said the value of the deals were based on the carrying value of the bank in its books as at March 31, 2023.
Centum had valued its stake, then 83.43 percent, at Sh4.24 billion, giving Sidian a valuation of Sh5.08 billion.
The valuation means K-Rep Group, KWA Multi-Purpose and nine individuals pocketed Sh841.66 million from the sale of their stake.
The transaction comes when Kenya’s banking sector has witnessed increased deal-making, with foreign banks such as Access Bank and Egypt’s Commercial International Bank (CIB) snapping shares in local banks. Kenya’s banking industry has had a flurry of deals in recent years on the back of outsized profits and dividends.
K-Rep Group Limited sold its 501,430 shares or 11.4 percent shareholding for about Sh579.3 million, ending its journey in the lender it founded. The group in 2014 sold a controlling stake to Centum, leading to a rebrand to Sidian the following year.
KWA Multi-Purpose also relinquished its 3.26 percent stake of 143,376 shares valued at Sh165.64 million in Sidian, joining the other shareholders in selling.
All the nine individuals —Kimanthi Mutua, Sarah Godana, Kabiru Kinyanjui, Mwenda Thiribi, Francis Kihiko, Aleke Dondo, Judith Bahemuka, Anthony Wainaina and Francis Munyao Kinyumu — who had a combined 83,719 shares or a 1.9 percent, were paid Sh96.72 million.
The first round of sale in October last year had seen Centum pocket about Sh1.98 billion for cutting its stake in Sidian from 83.43 percent to 44.52 percent in a transaction that saw the lender cease being a subsidiary of the investment firm.
The latest disclosures show that Centum sold a further stake within the last two months of the year, cutting down its stake to 40.03 percent, meaning that it pocketed an additional Sh228.05 million.
The two rounds of transactions have given Pioneer General a 24.8 percent stake, making it the second highest shareholder after Centum’s investment vehicle Bakki Holdco Limited.
Pioneer is followed by Wizpro with an 18.27 percent stake and Afram holding 7.91 percent. Telesec and Pioneer Life follow with 4.5 percent and 4.49 percent stake respectively.
The five institutional shareholders, all listed as local, added to Bakki, make up the six owners of Sidian, compared with the previous year when it had four institutional investors and nine individual owners.
Sidian Bank posted a Sh447.96 million net loss in the financial year ended December 2023 against a net profit of Sh395.4 million in the previous year. The loss marked the first since 2018 when it made a Sh377.88 million loss.
K-Rep Group established the firm in 1984 as a project that supported the development of small and micro enterprises through NGO-managed programmes. The project was incorporated as a local NGO the following year before K-REP Bank was licensed as a bank in 1999.
Centum in November 2014 acquired a majority shareholding in K-Rep, making the lender its subsidiary. The lender the following year established a bancassurance subsidiary and then rebranded to Sidian in 2016.
The lender has attracted several long-term financing for capital and on-lending, including in 2018 when it received €2 million (Sh284.7 million) from East African Development Bank and a further €3.5 million (Sh498 million) from the same financier in 2022.
Sidian in 2019 received $12 million (Sh1.6 billion) tier II capital from Investment Fund for Developing Countries and $20 million (Sh2.7 billion) from The Dutch Entrepreneurial Development Bank (FMO) to support its growth. It received €200,000 (Sh28.5 million) in 2020 from Aqua for All.
Another round of funding came in 2021 with $9 million (Sh1.2 billion) from Oikocredit, $10 million (Sh1.33 billion) from Triodos Investment Management and $5 million (Sh665 million) from WaterEquity. The bank in the same year got $10 million tier II capital injection from EMF Microfinance Fund.
Sidian last year received an additional $5 million from WaterEquity and a further $10 million from Oikocredit for expansion.
