Family Bank Kenya targets to raise about Sh6.2 billion through an ongoing private placement to support the growth of its business.
Private companies that seek to raise capital through issuing securities have two options: offering them to the public or through a private placement.
A private placement involves the sale of stocks or securities directly to private investors, such as investment banks, rather than as part of a public offering.
Though management remained mute on whether they were conducting a private placement, insiders involved in the transaction, revealed the bank was currently in the market to raise Sh6.2billion.
The bank, which reported a 38.6 percent net profit growth for the half year ended June 2025, is raising cash from select sophisticated investors in a private placement closing at the end of August 2025.
“From our simulation, we are looking at that figure to be more than Sh6 billion to support the next growth phase. Capital support, of course, is not only Sh6 billion because we are also projecting we will have retained earnings,” Family Bank’s Chief Financial Officer Paul Ngaragari said.
Family Bank said it made Sh2.2 billion in after-tax profit for the six months ended June, up from Sh1.6 billion in a similar period a year earlier. The bank's growth has seen its capital ratios thin against statutory requirements. The bank's total capital to total risk-weighted assets stood at 15.9 percent, giving it a 1.4 percent headroom above the mandatory requirement of 14.5 percent.
“We definitely need capital to support the rapid growth, but that capital is not for any regulatory purposes. It's not for lending purposes because our liquidity is at 53percent. But for every asset you deploy, you charge capital. And that's why that ratio continues to be strained,” Mr Ngaragari.
Family Bank, which plans to list at the Nairobi Securities Exchange next year, is also eyeing regional expansion with Uganda and the Democratic Republic of Congo on its radar.
The bank said it intends to be in the two markets within the next five years without closing its doors to Tanzania, where a scouting team had visited in July.
Management disclosed it had contracted global consultancy McKinsey to help it structure a four-year strategy in which the regional expansion is embedded. A one-off payment to McKinsey pushed the bank's operating expenses up 36 percent to Sh6.7 billion from Sh4.9 billion a year earlier.
The profit growth was on the back of reduced cost of funds which rose 5 percent despite a 26 percent expansion in the bank's deposit base to Sh149.7 billion from Sh119 billion.
The bulk of the deposits was packed in government securities whose portfolio expanded 45 percent while the loan book grew by 10 percent. Family Bank's loan book was Sh100.9 billion, which earned it Sh7.7 billion in interest income, up from Sh6.7 billion a year earlier.
Investment in Treasury bills and bonds was Sh60.6 billion, which earned it Sh3.4 billion, with the bank stating intentions to lend more to the productive private sector in the second half as treasury yields decline.
“A lot of that money (currently in government securities) will be channeled to the private sector where we see our returns being better than government securities,” said Mr Ngaragari. “
That does not mean we won't invest in government security because we have to bridge the gap between assets and liabilities inflow. So where liabilities come in at a fast rate, we park the money in government securities or the interbank market, but the final destination is loans and advances in line with our banking model,” he added.
