Jamii Bora Bank CEO Sam Kimani during the bank’s AGM in Nairobi June 3, 2014. Photo/DIANA NGILA
What you need to know:
Holders of at least Sh300 million worth of Jamii Bora’s corporate bond issued last year are willing to convert their debt to the company into shares.
Jamii Bora is also planning a rights issue as part of the fresh capital injection to help the lender comply with the Central Bank of Kenya’s capital requirements.
Jamii Bora Bank is set to admit into its ranks new shareholders who have agreed to convert their corporate bond into equity as part of the lender’s plans to inject Sh1 billion capital into the business.
The bank’s chief executive Sam Kimani says holders of at least Sh300 million worth of Jamii Bora’s corporate bond issued last year are willing to convert their debt to the company into shares.
Jamii Bora is also planning a rights issue as part of the fresh capital injection to help the lender comply with the Central Bank of Kenya’s capital requirements.
“There is appetite for Sh300 million mainly held by high net worth individuals. It will be a partial conversion by those who want to opt in,” said Mr Kimani Tuesday.
Jamii Bora shareholders Tuesday approved conversion of the Sh1 billion corporate bond into shares and also ratified a proposal to issue five million new shares through a cash call.
Jamii Bora floated the five-year bond last year with a 13.3 per cent coupon rate that was taken up mainly by insurance firms and high net worth investors.
“The bank is growing and we need additional capital to aggressively lend to SMEs and put in place an Internet, mobile and agency banking platform,” said the CEO.
Mr Kimani said the price for the bond conversion and rights issue will be determined by the transaction advisor depending on the bank’s valuation and market prices.
Jamii Bora shares are currently trading at between Sh230 and Sh250 at the over-the-counter (OTC) platform hosted by Standard Investment Bank.
The additional funds will increase Jamii Bora’s core capital to Sh2.4 billion and allow the bank to grow lending to small and mid-sized (SME) enterprises and invest in technology driven channels such as Internet and mobile banking.
The Central Bank of Kenya has passed new prudential requirements raising the ratio of total capital requirement to total risk-weighted assets by an extra 2.5 percentage points to 14.5 per cent in order to provide an extra cushion in times of unexpected shocks.
Kenya’s banking laws cap lending to a single borrower at 25 per cent of a bank’s core capital, meaning Jamii Bora can loan up to Sh361 million to one client based on its current core capital of Sh1.4 billion.
Jamii Bora’s loan book recorded a threefold growth last year to Sh3.8 billion from Sh1.3 billion in 2012, driven by increased lending to micro-borrowers.
Its net profit nearly doubled to Sh93.8 million in the period to December 2013 compared to Sh52.7 million a year earlier.
Mr Kimani said Jamii Bora would focus on lending to three sectors namely microfinance, consumers as well as SMEs and agribusiness which he says are greatly under-banked and offer growth opportunities.
This will be the bank’s third cash call in as many years after raising Sh270 million in 2011 and after a further Sh519 million was raised through a rights issue in 2012.
Jamii Bora has 22 branches in Kenya with a customer base of 366,000. It converted into a commercial bank in 2010 when the microfinance institution merged with City Finance Bank.
It is owned 24.5 per cent by Asterisk Holdings Ltd, an investment vehicle owned by Mr Kimani and former KCB Bank executive Timothy Mwaniki Kabiru.
Jamii Bora Scandinavia AB, a group of Swedish investors, have a 24.2 per cent stake in Jamii Bora.
