Jamii Bora seeks strategic investors in expansion plan
Jamii Bora Bank chief executive Samuel Kimani speaks to journalists during a media briefing at the Hilton Hotel in Nairobi on Tuesday. Photo/SALATON NJAU
What you need to know:
Lender is looking for parties to inject up to Sh1bn, giving them up to 40pc shareholding.
The bank seeks to raise its capital to Sh2.5 billion.
Jamii Bora Bank is looking for strategic investors to inject up to Sh1 billion, potentially giving them a 40 per cent shareholding in the bank.
Chief executive Samuel Kimani said Tuesday that the bank needs money for expansion into a medium-sized bank, but has exhausted cash calls on current owners.
“We would like to raise our capital to Sh2.5 billion, therefore we will need another Sh1 billion. We will look to bring in strategic investors who will not just provide capital, but also add value to the bank in business expertise,” Mr Kimani told the Business Daily.
He said the bank was neither considering a rights issue, for fear of investor fatigue, nor a corporate bond like the one that raised Sh1 billion last year because of the expenses involved.
The Central Bank of Kenya restricts shareholding in banks by individuals to 25 per cent, with exceptions given to international organisations, government institutions and other financial institutions.
“The benchmark for the percentage of shareholding will be the valuation placed on Jamii Bora, which can start from the equivalent of the current capital size of about Sh1.5 billion to up to two and a half times that amount,” said Standard Investment Bank head of research Francis Mwangi.
If the strategic investor were to value the bank at two times the current capital, the Sh1 billion would be equivalent to 26.6 per cent of the bank.
The bank may therefore be forced to look for more than one strategic investor to keep within the rules, or seek investment from a fellow financial institution that would also provide the technical expertise sought by Jamii Bora.
Since 2012, Jamii Bora has tapped capital markets thrice for cash.
The lender raised Sh1 billion in two rights issues in 2012, used for branch expansion and to meet the regulator’s minimum capital requirement.
Last year the lender issued a Sh1 billion five-year bond to fund its mortgage and SME loans business. The bond that closed in August 2013 has a 13.3 per cent coupon rate.
Mr Kimani also disclosed that the lender will not be listing on the GEMS segment of the Nairobi Securities Exchange in 2014 as had earlier been announced, saying the bank needed to reinvest earnings in its growth.
Shareholder expectations
This, he added, cannot be achieved when the company is listed because of shareholder expectations of dividends. The listing has been pushed back by a year at the earliest.
The bank’s shares trade on the OTC (over the counter) market. A Sh400 million investment in IT is planned.
