Choice MFB shareholders will cede majority stake to a strategic investor.
This comes barely three months after the board sent a circular to shareholders asking them to inject fresh capital of up to Sh170 million by buying 1.7 million new shares at Sh100 each.
Currently the community MFB has 1.3 million units in issue.
Diaspora-backed Choice MFB shareholders will cede majority stake to a strategic investor as it seeks fresh capital to finance expansion and boost lending capacity.
The board has invited shareholders to a Special Annual General Meeting (SGM) next Tuesday at its head office in Rongai, Kajiado County to vote on the board’s resolution.
“That subject to receipt of requisite regulatory approval, allot additional ordinary shares to a strategic investor who had indicated interest in acquiring majority shares in the company,” reads the SGM notice signed by chairman Simon Gachunia.
The entry of the undisclosed strategic investor is expected to cause changes in ownership and board membership. The notice shows that Choice is further seeking shareholder approval to enhance and reconstitute the board of directors.
The move comes barely three months after the board sent a circular to shareholders asking them to inject fresh capital of up to Sh170 million by buying 1.7 million new shares at Sh100 each. Currently the community MFB has 1.3 million units in issue. Choice has been in losses since its licensing in May, 2015. The dip in capital ratios dents its ambition to convert into a national microfinance.
The outlook for micro-lenders is grim just as that of tier III banks, with losses and capital constraints making it hard for them to attract business.
CBK has been seeking public views on the proposed Microfinance Bill, 2019, which it says will be used to review the existing regulatory and supervisory framework for microfinance banks to accommodate changes in the industry over the years.
The draft gives CBK powers to intervene in the affairs of an MFB which fails to maintain prescribed minimum core capital or becomes significantly undercapitalised. CBK will then order such institution to submit, within 45 days, a “capital restoration plan to restore the institution to the prescribed capital adequacy,” according to the draft rules.
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