Family Bank wants to create 800 million additional shares and raise money through a rights issue as part of a $100 million (Sh14.7 billion) expansion plan in the race to tier I status.
The lender on Wednesday issued a notice of extra-ordinary general meeting (EGM) to shareholders in which it will be seeking to increase its share capital from the current Sh1.5 billion to Sh2.3 billion through the creation of new 800 million ordinary shares.
Family Bank board will be seeking approval from shareholders on October 18, which if approved, will pave the way for a rights issue.
The lender did not comment on how much it will be seeking to raise from this rights issue. The directors will be making a decision on the offer price per share.
“The increase in share capital is in line with the bank's long-term plans to fundraise. The funds raised will go towards strengthening the balance sheet in Kenya as well as position the bank for opportunities within the region,” said the bank in an emailed response to the Business Daily questions.
Family Bank CEO Rebecca Mbithi had told shareholders in a June 28 annual general meeting that there was a plan to raise $100 million as capital to explore opportunities for mergers and acquisitions with an eye for regional expansion
Shareholders who will not take up the rights issue offer within the period that is going to be set by directors will see their stake get diluted since the board will be free to offer and allot such shares to parties that are not currently on the shareholding list.
Family Bank, which said in May was eying a private placement, says the rights issue will complement the capital-raising process.
“The bank is open to new investors while giving an opportunity to the existing shareholders to increase their investment in the bank. Subject to the approval by the shareholders and the regulators, the two processes will run concurrently,” said the bank.
Kenya Tea Development Agency Holding was the top shareholder in Family Bank with a stake of 16.5 percent at the end of December last year, followed by the estate of Rachael Njeri (12.98 percent), Daykio Plantations Limited (12.3 percent) and Titus Kiondo Muya (5.7 percent).
Top 10 shareholders held a 64.94 percent stake, leaving the rest of shareholders with about 35.1 percent stake.
Family Bank chairperson Wilfred Kiboro in June told shareholders the lender was eying a local acquisition as well as exploring opportunities in Uganda, DRC Congo, Tanzania or Ethiopia.
“Our team is currently undertaking the necessary research that will inform our decision. Our focus is on an opportunity with synergistic benefits to the bank and aligns with our strategic focus and objectives,” said Mr Kiboro.