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The Nairobian

Banks turn to shareholders to boost funding

Business

By Otiato Guguyu | May 03, 2017

**Cooperative Bank of Kenya PHOTO:COURTESY**

Banks are turning to shareholders to boost their funding as they brace themselves for the first full year under the interest rate cap.

Cooperative Bank of Kenya announced that it will be seeking approval of its shareholders to boost its capital by issuing them bonus shares.

The bank said it will create an additional Sh2.5 billion worth of ordinary shares to boost its share capital to Sh7.5 billion. The lender seeks to raise its authorised share capital to Sh7.5 billion (divided into 7.5 billion shares of Sh1 each) by creating 2.5 billion ordinary shares of Sh1 each.

“Subject to approval by the Capital Markets Authority, the sum of Sh977 million being part of the money now standing in the credit of the share premium reserve of the company be capitalised and the same be applied in making payment in full at par for ordinary shares,” said the lender in a notice signed by Company Secretary Samuel Kibugi.

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Co-operative Bank said it is seeking shareholder approval for a bonus share issue of one share for every five held.

The bank said the increase in authorised share capital is for accommodating and allowing it to issue new shares that will be created by the proposal of one to five bonus share issue that will see an additional 977,863,400 new shares issued. It, however, said no rights issue is planned.

Jamii Bora’s shareholders have also approved an increase in nominal share capital to Sh5 billion over five years to support its business growth strategy and strengthen its capital base. “The shareholders approved the proposal by the board of directors to increase nominal share capital from Sh3.049 billion to Sh5.029 billion by creating 30 million additional ordinary shares, subject to regulatory approvals. Each ordinary share is valued at Sh66,” the lender said in a statement yesterday.

Last December, Jamii Bora got a boost when Chicago-based private equity fund Equator Capital Partners LLC, under its ShoreCap II fund gave it Sh600 million. The bank now wants to borrow a convertible debt of Sh3 billion while limiting the sought-after strategic investor to a stake not exceeding 40 million shares.