The subsidiary undertook a Sh515 million rights issue to boost its capital position in the wake of economic challenges that affected the banking industry in that market.
The unit secured a Sh1.2 billion loan from Dutch development finance institution FMO and has accessed Sh824 million of the amount for on-lending.
Increasing its interest in the Tanzanian unit is part of I&M’s strategy of diversifying into the regional market.
I&M Holdings #ticker:I&M has invested Sh819.9 million in acquiring an additional 15.35 per cent stake in its Tanzanian subsidiary through a series of transactions that included the buyout of French fund Proparco.
This raised the banking group’s interest in the unit to 70.38 per cent from the previous 55.03 per cent, according to the Nairobi Securities Exchange #ticker:NSE -listed firm’s latest annual report. Besides acquiring some shares from Proparco, I&M also participated in the subsidiary’s rights issue in which it took up shares left by other minority investors.
“During the year, the group increased its shareholding in the subsidiary to 70.38 per cent up from 55.03 per cent held earlier following the exit of Proparco, which had reached the end of its investment horizon,” said I&M chairman Daniel Ndonye in the statement.
The subsidiary undertook a $5 million (Sh515 million) rights issue to boost its capital position in the wake of economic challenges that affected the banking industry in that market.
I&M says the introduction of austerity measures last year greatly affected money circulation and reduced credit to the private sector.
The banking sector was also hit by the implementation of value-added tax on financial service charges “and a significant increase in the stressed assets in view of the tight liquidity position”.
The unit secured a Sh1.2 billion loan from Dutch development finance institution FMO and has accessed Sh824 million of the amount for on-lending.
The subsidiary made a pre-tax profit of Sh373 million in the year ended December, rising marginally from Sh371 a year earlier. Its loan book increased 11 per cent to Sh13.7 billion from Sh12 billion in the same period while customer deposits grew four per cent to Sh13.1 billion from Sh12.6 billion.
Increasing its interest in the Tanzanian unit is part of I&M’s strategy of diversifying into the regional market.
“While Kenya remains the dominant player within the EAC region, we are witnessing increasing strong growth in the other EAC economies – Tanzania, Rwanda and Uganda, which further affirms our goal to be a regional bank,” said Mr Ndonye.
