Family Bank towers on Muindi Mbingu Street and Moktar Daddar Street, Nairobi County in this picture taken on Wednesday, March 22, 2023. PHOTO | DENNIS ONSONGO | NMG
Family Bank is eying up to $100 million (Sh13.7 billion) through private placement to fund acquisitions in Kenya and Eastern or Central Africa in the race to tier I status.
Family Bank chief finance officer Stephen Karumbi said on Wednesday the bank wants to raise the money within the next 12 months and fund the two deals as well as a possible acquisition of a controlling stake in a fintech firm.
“In the local market, we are currently actively looking out for opportunities to acquire a bank. We believe there are still opportunities especially within the tier III and even deposit-taking microfinance institutions,” said Mr Karumbi.
“We are also planning regional expansion. We have already done the groundwork in terms of feasibility studies within countries in the east, west and central Africa region. We do have a ranking and we are currently looking at the top four which are Uganda, DRC Congo, Tanzania and Ethiopia.”
The lender, which will be turning 40 next year, has relied on organic growth to acquire its tier II status but now wants to ride on a mix of organic and inorganic growth to expand beyond Kenya for the first time.
Family Bank’s expansion beyond Kenya will mirror that of KCB Group, Equity Group, Co-operative Bank of Kenya, NCBA Group and I&M Group which all have subsidiaries outside Kenya.
“It is highly likely that we will do one of them within the next 12 months or be at quite an advanced stage with each of them,” said Mr Karumbi adding that the lender is also eying a significant stake in fintech.
Mr Karumbi said Family Bank has already started road shows to lay ground for the equity fundraising which will be preceded by shareholder approval in the next annual general meeting (AGM) set for next month.
“The equity fundraising will be a private placement. The timeline we are looking at is within the next 12 months. There are quite a number of shareholder approvals we need so we hope to get them in our next AGM sometime next month,” he said.
Part of the approvals the bank will be seeking from shareholders will be for them to waive their pre-emptive rights so as to bring on board a significant shareholder or shareholders.
A preemptive right is a right of existing shareholders in a firm to purchase newly issued stock before it is offered to others so as to protect them from dilution in value or control.
Family Bank says the existing shareholders will have a right to participate in the equity fundraising under the same terms as the investors who may come on board.
From running one branch in 1985, the bank has grown over time since it became a fully-fledged commercial bank in May 2007 and currently has 93 branches in the country.
