Family Bank plans to Invest Sh13 Billion in New Acquisitions

In its pursuit of tier, I status, Family Bank is looking to raise up to $100 million (Sh13.7 billion) through a private placement to finance acquisitions in Kenya and Eastern or Central Africa.

Stephen Karumbi, the chief financial officer of Family Bank, stated on Wednesday that the bank hopes to raise the necessary funds within the next 12 months to finance the two transactions as well as a potential acquisition of a controlling interest in a fintech company.

“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 turn 40 in a year, relied on organic growth to achieve tier II status but now plans to first venture outside of Kenya by utilizing a combination of organic and inorganic growth.

The international growth of Family Bank will resemble that of the subsidiaries that KCB Group, Equity Group, Co-operative Bank of Kenya, NCBA Group, and I&M Group all have outside of 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.

In order to lay the groundwork for the equity fundraising, which will be preceded by shareholder approval at the next annual general meeting (AGM), scheduled for next month, according to Mr. Karumbi, Family Bank has already begun holding road shows.

“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.

Shareholders will be asked to waive their pre-emptive rights as part of the bank’s request for their approval to add a significant shareholder or shareholders.

Existing shareholders of a company may exercise a pre-emptive right to purchase newly issued stock before it is made available to other investors in order to safeguard their interests against dilution of value or control.

According to Family Bank, the current shareholders will be entitled to take part in the equity fundraising on the same terms as potential new investors.

The bank began operating one branch in 1985 and has since expanded to operate 93 branches across the nation since becoming a full-fledged commercial bank in May 2007.