French investor buys Sh900m stake in Chase Bank

Chase Bank Central Offices along Chiromo road, Nairobi. The bank seeks to boost its presence in counties in its five-year growth plan. Photo/Salaton Njau
Chase Bank Central Offices along Chiromo road, Nairobi. The bank seeks to boost its presence in counties in its five-year growth plan. Photo/Salaton Njau 

Paris-based investment firm Amethis Finance has injected Sh900 million ($10.5 million) into Chase Bank, which is seeking to join top tier bankers and go regional.

Chase Bank, a fast-growing mid-tier bank, hopes to inject Sh6.9 billion ($80 million) in equity and debt into its operation by next June to join the top-five rank.

The bank has in the past 15 months raised another Sh6.02 billion ($70 million) as part of its drive to source Sh12.9 billion ($150 million) for funding its small and medium-sized enterprise (SME) lending and branch expansion.

Earlier in 2011 the bank secured Sh860 million ($10 million) in additional capital by way of a private placement.

“Amethis will be present at the board and will support Chase Bank efforts in strengthening its internal organisation and accessing an international network,” said Amethis, an investment firm dedicated to Africa worth $300 million at the close of last year.

The company joins the top five shareholders at the bank with the investment.

Chase Bank has secured funding from European development finance institutions, fund managers and African investors and lead transaction advisers Genghis Capital said it would seek a further four or five financing deals before the end of the year.

The bank obtained part of the Sh6.02 billion in form of debt on attractive terms, according to Genghis corporate finance head Samy Ghannam.

“The focus was to diversify the range of stakeholders, and bring in institutional investors with good global knowledge and experience of SME, microfinance and help build a regional group,” said Mr Ghannam.

He said the bank would be well placed to make timely repayments of the debt given that part of the funds is meant to expand the loan book, pushing up interest income.

Other institutions that provided debt to Chase Bank last year are the European Investment Bank (Sh718 million) Deutsche Bank (Sh860 million), responsAbility Social Investments AG of Switzerland (Sh1.29 billion) and DEG group of Germany Sh860 million). responsAbility also loaned Chase Bank subsidiary Rafiki Microfinance Sh430 million in 2012.

The bank, which has 22 branches, is seeking funding for its five-year expansion plan launched last year to establish a strong presence in the new counties before moving into the East African region.

The bank’s senior marketing and communications manager Magdalene Mulandi said that availability of funds means the lender can now plan for regional expansion to compete with the big Kenyan banks.

“Our new five-year plan projects that we move from a second-tier to a first-tier bank in Kenya by increasing our number of customers, the size of our loan book, and the number of branches,” said Ms Mulandi.

Chase Bank is due to announce its financial results for 2012 on Tuesday next week on the back of improved performance in the banking sector.

In 2011, the bank recorded a 58 per cent rise in net profit from Sh381.3 million in 2010 to Sh602.2 million and expects a further increase this year.