The Muyas to cut Family Bank stake by more than half
Family Bank founder Titus Muya addresses shareholders at a meeting last year. The Muya family is seeking to reduce its stake in the bank to 25 per cent . FILE
The Muya family is seeking to reduce its stake in Family Bank to 25 per cent as the lender broadens its ownership ahead of listing at the Nairobi Securities Exchange in the next two years.
Titus Muya, the bank’s founder, has a direct stake of 17.3 per cent while his family members as well as his investment vehicle, Daykio Plantations, had a combined stake of about 43.7 per cent in October. The family did not participate in the lender’s recently concluded Sh1.25 billion rights issues — a move that diluted the Muya’s shareholding from 60 to 57 per cent.
Last week, Mr Muya said his family will reduce its shareholding further either through selling shares or through dilution should the bank create new shares.
“By ceding ownership as I am doing, the bank will be able to grow its loan book, attract investors and grow towards achieving its targets,” said Mr Muya in an interview with the Business Daily. “We cannot hold onto a bank forever unless we do not want it to grow.”
The Central Bank of Kenya has been keen to reduce the influence of individual majority shareholders in Kenya’s banks to protect the rights of minority investors.
The ownership structure of Family Bank has been changing speedily in recent months through private placements and deal making involving private equity funds.
On Tuesday last week, the bank announced that three PE funds—Tunis-based AfricInvest, Netherlands’ FMO and Norway’s Norfund — sold their 22.3 per cent stake for an undisclosed fee to KTDA and Laptrust ahead of the lender’s rights issue.
The deal was estimated at Sh1.8 billion based on Family Bank share prices of Sh35 on the over the counter. The funds acquired the stakes two years ago for Sh916 million, highlighting the rising valuation of the bank Mr Muya started 28 years ago.
Mr Muya, a former civil servant, entered the world of entrepreneurship with the founding of Family Finance Building Society in November 1984 at a single outlet along Nairobi’s Kenyatta Avenue.
But the huge expenses associated with the city soon forced the entrepreneur to open a branch in Kiambu Town one year later.
It was the beginning of a journey that saw Mr Muya serve as the society’s managing director and chief executive for 22 years before assuming the chairmanship six years ago.
These past six years has also seen Family Bank make the transition from a building society to a fully-fledged bank. Since making that transition in 2007, Family Bank has made the difficult climb of reorganising the business and freeing it— though slowly — of the Muya family’s grip.
The bank has also spread its footprint, establishing 67 branches countrywide, signing up 1.2 million customers and accumulating an asset base of Sh35 billion.
Family Bank has modelled its business around micro-finance, but is now seeking to widen its offering to include home loans and corporate banking which offer big ticket lending at relatively lower cost.
The Central Bank of Kenya places Family Bank’s market share at 1.34 per cent compared to Barclays (8.90 per cent), Equity (9.98 per cent) and KCB (14.52 per cent). The bank has reviewed its executive suite and boardroom over the past 18 months in search of talent that will help it achieve this goal.
This culminated in the hiring of Peter Munyiri as CEO from KCB Group last June and appointment of Wilfred Kiboro as designate chair of the bank following the retirement of Mr Muya. Mr Kiboro was previously the chairman of Standard Chartered Bank.
The PE funds linked their exit to a good offer from the new owners and fear of being barred from selling part of their shares for a period once the bank lists at the Nairobi Stock Exchange (NSE).
Family Bank has announced plans to list at the NSE within two years and the capital markets regulators normally prevents major shareholders from abandoning ship or selling part of their holding.. within a period of one and five years of going public.
