Corporate News
Jamii Bora Bank chief executive Samuel Kimani (left) with Postbank
acting managing director Anne Karanja during the signing of an agency
banking agreement on July 22, 2014. Photo/Diana Ngila
By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com
In Summary
- Jamii Bora Bank has planned a Sh1 billion rights issue in September to finance its expansion plans.
- Besides part-conversion of the bond into equity, the bank has plans to sell a Sh200 million stake to a strategic investor, while Sh400 million will be raised in cash.
- The additional funds collected from the cash call, the bond conversion and strategic investor will increase Jamii Bora’s core capital to Sh2.4 billion, allowing it to grow lending to small and mid-sized (SME) enterprises.
Investors holding up to Sh400 million worth of Jamii
Bora Bank’s corporate bond have committed to convert their interest into
shares, helping to raise 40 per cent of the lender’s targeted amount in
the upcoming rights issue.
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Jamii Bora has planned a Sh1 billion rights issue in
September to finance its expansion plans and meet the Central Bank of
Kenya’s (CBK) capital requirements.
Besides part-conversion of the bond into equity,
the bank has plans to sell a Sh200 million stake to a strategic
investor, while Sh400 million will be raised in cash.
“It (conversion of the bond into shares) is just a
paper entry transaction once we get the individual investor approvals,”
said Jamii Bora chief executive Samuel Kimani on Tuesday during the
launch of an agency agreement with Postbank.
Mr Kimani said the lead adviser for the transaction
– Standard Investment Bank (SIB) – is finalising on the terms of
conversion, which will indicate the equivalent number of shares that
each bondholder will get.
“Once we get at least 75 per cent investor approval
in the coming weeks, we shall have completed the transaction by
September,” he added.
Jamii Bora floated the five-year bond last year
with a 13.3 per cent coupon rate. Last month, the bank’s shareholders
approved the proposed conversion of the bond into shares and also
ratified a proposal to issue five million new stocks through a cash
call.
Mr Kimani told the Business Daily that the
rights issue – the third the company will be holding since 2011 – will
be completed in October while the sale of the bank’s stake will be
finalised by end of the year.
“For now, the local strategic investor will get
just below five per cent shareholding since this is within limits that
CBK allows buyouts without having to get their approval,” said Mr
Kimani.
The additional funds collected from the cash call,
the bond conversion and strategic investor will increase Jamii Bora’s
core capital to Sh2.4 billion, allowing it to grow lending to small and
mid-sized (SME) enterprises.
Kenya’s banking laws cap lending to a single
borrower at 25 per cent of a bank’s core capital, meaning Jamii Bora can
loan up to Sh361 million to one client based on its current core
capital of Sh1.4 billion.
On Tuesday, Jamii Bora signed an agreement that
will see its customers make cash deposits and withdrawals as well as
apply for account opening through Postbank’s agents and branches in
Kenya.
This partnership heralds Jamii Bora’s entry into
agency banking, a route which the bank hopes will increase its reach
across the country
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