Family Bank launches Sh1.2 billion Rights Issue

By  James Anyanzwa

Family Bank wants to raise Sh1.2 billion through a Rights Issue to fund its expansion programme.

The bank is off-loading an additional 40.5 million shares to existing shareholders in the ratio of one share to every six held (1:6). The Issue, which is priced at Sh31 per share, was launched yesterday and will close on December 7.  The new shares will begin trading on the Over-The-Counter market on January 14.

The bank’s in-coming Chairman, Wilfred Kiboro, said the proceeds of the Rights Issue would be used to expand the bank’s footprint both locally and regionally, deploy Internet and Visa Card banking, agency banking and shore up the bank’s capacity  in order to attract more deposits and increase the loan book.

“Our business strategic intent is to become a tier-one bank in the next five years,” Kiboro told a media briefing in Nairobi yesterday, adding that Family Bank has a clear plan of becoming a player in the economic development of the East Africa.

The current rights issue is the bank’s second cash call after a previous one in 2009, which saw shareholders pump in Sh1.5 billion, later followed by an injection of Sh1 billion via a private share placement in September last, year.

Loan book

Tunis-based Africinvest, Netherlands’ FMO, and Norway’s Norfund made a joint equity investment of Sh1 billion in the bank, which gave them a 22.4 per cent stake. The capital injection from the strategic investors and the Rights Issue helped the bank to grow its loan book to Sh16.3 billion, a 59 per cent increase from Sh10.3 billion in 2010.

Family Bank is reportedly considering South Sudan and Rwanda as new markets, while also operating a branch in every county in Kenya.

 The bank currently has Sh35 billion in assets, 1.2 million customers and 67 branches countrywide.

Since its inception in 1984, Family Bank operated as a building society that gave loans to tea farmers, and then expanded to small business owners and civil servants.

Kiboro, who joined Family Bank just a day after stepping down as the chairman of Standard Chartered Bank Kenya, said elaborate plans are already underway to propel the bank to a new growth phase.

“The bank is in great shape. We have what it takes to take the bank to the next level of growth,” said Kiboro.