Diaspora-backed Choice MFB shareholders have ceded major stake to an unnamed strategic investor as the loss-making micro financier seeks fresh capital to finance expansion and boost lending capacity.
A notice by the lender said the unnamed investor had received shareholders’ nod at the firm’s special general meeting held in Rongai last Saturday.
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.
“We now have a credible strategic investor who has given us very good terms and other than the Sh70 million, they also have a loan book of Sh100 million and in excess of over 1 million customers,” said acting chairman Simon Gachunia in a circular to shareholders.
The loss-making firm had been banking on a strategic investor to turn around its fortunes. The firm is now seeking Sh43 million to plug capital shortfalls.
“As you are aware from our last meeting in June 18, 2019, you were informed that we needed to raise Sh113 million or we look for a strategic investor. Now we fall short of raising Sh43 million.
As shareholders we have been asked to raise Sh21 million to Sh30 million. This will help the bank sustain her daily operations and offer sobriety during this transition period,” said Mr Gachunia.
Mr Gachunia has now asked shareholders who hold deposits in the bank as current, savings or fixed deposit account to convert all or a portion thereof to shares at 90.00 each.
“This will assist in reduction of our liability. We are also appealing to you to contribute new share subscription by injecting new money,” he said. The move comes 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.