Unaitas on course to bank status with Sh1.3bn capital

Financial services firm Unaitas’ plan to convert into a fully-fledged bank has gathered pace with the lender announcing it had surpassed the Sh1 billion minimum core capital required by Central Bank of Kenya and fulfilled many statutory requirements.

Unaitas chief executive Tony Mwangi said the Sacco had hit the Sh1.3 billion mark and now targets to increase its capital by about 40 per cent in the next six months.

“We intend to grow our core capital from Sh1.3 billion to Sh1.8 billion by end of the year,” said Mr Mwangi at the launch of Unaitas’ five-year strategic plan (2014-2018) at the Intercontinental Hotel in Nairobi on Tuesday.

Mr Mwangi was, however, non-committal on whether the lender would meet this target by asking shareholders to pump in funds through a rights issue or by capitalising its reserves.

“We are going to achieve that through very specific activities geared towards fund mobilisation.” During its AGM earlier in the year, Unaitas announced it had achieved nearly Sh800 million core capital and was targeting Sh1 billion by year end—meaning investors have injected capital faster than then expected.

The strategic plan seeks to see Unaitas become a fully-fledged bank within the next four years, during which it plans to list on the Nairobi Securities Exchange (NSE).

READ: Unaitas eyes growth segment at Nairobi bourse

The journey to NSE was kick-started after Unaitas invited bids in April for consultancy on listing and changing its capital structure.

The lender has received applications from a majority of the local investment banks, Mr Mwangi said the tenders will be opened on June 12.

Unaitas has 150,000 members, 18 branches in five counties and Sh6 billion in assets. The five-year plan targets to grow customer numbers by more than four times to 650,000 spread in other counties in addition to Nairobi, Murang’a, Machakos, Kajiado and Nakuru where it operates. Last year the Sacco paid shareholders Sh0.90 for every Sh10 share.

Rapid growth

Corporate finance watchers say the rapid growth has emanated from providing banking services to members even though it is not officially a bank.

“Even when Unaitas was Muramati (Sacco), they did not benchmark themselves against other Saccos but against banks and resolved to provide customers with an experience similar to one they would receive at a bank,” said Rina Hicks, head of operations at Faida Investment Bank.

The bank prepared disclosure documents for Unaitas in 2012 for approval by the Capital Markets Authority (CMA) after the regulator stopped the Sacco’s first public capital raising plan in 2010.

Unaitas, then Muramati Sacco, attempted to raise Sh200 million but CMA stopped the funds drive saying that it breached capital raising guidelines by making public solicitations without approval.

Firms like Unaitas have cashed in on the rise in numbers of Kenyans with access to formal financial services due to the rapid growth of mobile money.

The Financial Access report by CBK and FSD Kenya show that despite the rapid growth of banks and Saccos targeting the mass market, there is still room for expansion.

The report shows that while most Kenyans have access to financial services by formal institutions, a majority of the institutions are not regulated giving room for Saccos and banks to increase their customer and asset base.