Equity Group Seeks Sh50bn Long-Term Debt In Three Years

Equity Group is seeking up to Sh50 billion from international financiers in the next three years as it strives to increase its liquidity and capital positions.

Speaking during a recent virtual annual general meeting, Group CEO James Mwangi told investors that the board is seeking to reinforce the lender’s liquidity and capital positions through medium-term and long-term debts.

“We anticipate we shall be able to get up to Sh50billion of liquidity through debts as it was demonstrated by World Bank releasing Sh5 billion to help us support SMEs,” said Mr. Mwangi.

Should the bank attain the 50 billion target, it will increase its borrowed funds beyond the Sh56.7 billion recorded in its books at the end of December 2019.

Earlier, the Kenyan banking subsidiary of Equity Group applied for $50 million (Sh5.3 billion) loan from International Finance Corporation (IFC), the private sector arm of the World Bank, for onward lending to small businesses hurt by the global Covid-19 pandemic.

In order to preserve cash, the bank recalled Sh9 billion in dividends and dropping the purchase of four banks outside Kenya.

“Forfeiture of dividends was a good gesture to all our partners that we are also in need as we called on them to support our customers,” Mr. Mwangi told investors.

In 2019, Equity borrowed a cumulative Sh17.4 billion from IFC, making it the largest lender to the group.

The upcoming credit line will raise the total to Sh22.7 billion.

Other top lenders include the African Development Bank (Sh10.7 billion), KFW Deg (Sh10.4 billion), ResponsAbility (Sh2.56 billion) and European Investment Bank (Sh2.34 billion.)

Local banks are increasingly taking substantial loans from global funds such as the IFC, European Investment Bank and Agence Française de Développement, attracted by relatively more favorable terms of the debt including lower interest rates and longer maturity.