The Kenya Women Holding (KWH) has ceded shares worth Sh1.5 billion of its micro-finance subsidiary to its members, bringing it in line with Central Bank’s regulatory requirements.
KWH says it has sold 25 per cent of its stake in Kenya Women’s Finance Trust (KWFT) to 60,974 members and another five per cent to founder directors of the lender.
The Central Bank of Kenya limits banks and other financial institutions to owning a quarter stake or less in deposit-taking microfinance (DTM) institutions.
Last year KWH sold 25 per cent stake to two investment funds, cutting its stake to 55 per cent but still leaving it above the regulatory ceiling hence the need for the latest transaction.
“We made a promise to our members that if they supported the growth of the institution by repaying their loans fully, growing their business through innovation and learning, KWFT would one day be theirs,” said KWH Group chief executive Jennifer Riria.
“They supported us and I am glad that we have delivered on the promise,” said Dr Riria adding that the new shareholders will be able to trade their shares over the counter (OTC).
KWH has over the past years gradually reduced its stake in KWFT, the largest player in the microfinance bank sector with over 600,000 customers who are largely women.
Earlier last year it sold a 25 per cent stake to Rural Impulse Fund, a Luxembourg-based firm, and NMI AS from Norway in a deal that saw it book over Sh1 billion.
The restructuring of its shareholding marks a milestone for the micro lender started in 1981 by a group of women lawyers, bankers, and entrepreneurs to address the financial needs of women.
KWFT became the first microfinance institution (MFI) to gain permission from the Central Bank in 2010 to accept deposits for onward lending instead of relying on donors and commercial institutions to support its loan book.
The capital-intensive conversion process had seen KWFT’s profits take a dip for three years in a row before rebounding in the past two years.
The microlender last year reported a net profit of Sh490 million up from Sh391 million in 2013 as its loan book expanded by Sh4 billion to Sh18.8 billion, fruits of its aggressive push to attract both savers and borrowers.
KWFT’s deposit base in the same year increased by Sh4.2 billion to Sh17.1 billion. KWH is majority owner of KWFT.
The deal values the microfinance bank at Sh6 billion.
KWH effectively halved its shareholding in KWFT to 25 per cent from 50 per cent. Foreign institutional investors own a 25 per cent stake while the board and staff own the remainder 25 per cent.
The share sale was done through the creation of a Special Purpose Vehicle (SPV).
“Already, the members will receive dividend declared on their shares for 2014, but going forward the members of Kenya Women Holding will enhance their shares by trading with each other on the Over the Counter Trading (OTC),” KWH said in a statement.
The members will trade KWFT shares through the SPV.
The micro financier began marshalling deposits from the public in 2010 after conversion from a credit-only institution. It is the largest microfinance bank in Kenya with over 600,000 customers who are largely women.