NIC lead adviser for micro-lender share sale

The bank’s corporate customers will process bulk M-Pesa payments through its Internet portal dubbed NIC Online. PHOTO | FILE 

 

By John Gachiri

In Summary

The sale involves a 25 per cent stake and the structure will be finalised in another one month or so. - Maurice Opiyo, NIC managing director.

Kenyan Women Holdings has appointed NIC Capital as the transaction adviser for the sale of its shares in deposit-taking micro-lender KWFT. The sale is meant to make KWFT compliant with banking regulations on ownership structure and will see Kenyan Women Holdings (KWH) half its shareholding to 25 per cent.

 

Lawyers Mboya Wangong’u & Waiyaki have been appointed legal advisors. NIC Capital said the share sale is expected to be concluded between September and October this year.

“The sale involves a 25 per cent stake and the structure will be finalised in another one month or so. That is when we will be setting price per share,” NIC managing director Maurice Opiyo told the Business Daily. KWFT members estimated to be around 600,000 will be offered the shares.

KWH has gradually been reducing its stake in the micro-lender. Earlier in the year it sold a 25 per cent stake to two strategic investors to comply with the Central Bank of Kenya (CBK) ownership rules.

The regulator only allows banks and other financial institutions to own more than 25 per cent stake in deposit-taking microfinance (DTM) institutions. Kenya Women Holdings is a non-profit organisation. CBK gave non-banking institutions up to four years to comply with the new laws that came into effect in 2006.

“A person who holds more than twenty-five per cent of the shares of a deposit-taking business existing at the commencement of this Act, which makes an application for a licence pursuant to section 49, shall comply with the requirements of subsection (1) within four years of the business being licensed,” says the Microfinance Act, 2006.

KWFT became a licensed deposit-taking institution on March 31, 2010, which makes this year the last for the micro-lender to comply with the Act.

The regulations demand that institutions present a plan on reducing ownership before they can get licensed by the Central Bank. The rules are meant to ensure stability of the institutions.
Faulu Kenya, which was licensed by the CBK in May 2009, was the first to comply after it sold a 67 per cent stake to Old Mutual. The remaining 33 per cent stake is owned by local investors and the industry.

Prior to the sale to Old Mutual, Faulu was majority owned by non-governmental organisation Food for the Hungry International (FHI).

SMEP, a micro-lender that is majority owned by the National Council of Churches of Kenya (NCCK), is also meant to reduce its shareholding by the end of this year. NCCK’s first attempt to reduce its stake was through a share sale in October 2012 that managed to reduce its shareholding from 100 to 73.72 per cent following an under-subscription.

A second share sale managed to raise Sh266 million against a target of Sh1.6 billion and cut NCCK’s stake to 31.8 per cent. SMEP said at the time that it was planning another share sale.
U&I, Uwezo, Remu, Rafiki, and Century are other DTMs. KWH was established in 1980 and opened its micro-finance subsidiary a year later.

Analysts said the share sale performance will come down to how the transaction advisors price the shares. “Success will depend on how it is structured,” said Johnson Nderi, corporate finance and advisory manager at ABC Capital.

For NIC Capital the KWH deal is the second publicly announced transaction advisory role this year. NIC Capital together with Kingdom Securities were appointed transaction advisors for CIC Insurance Sh5 billion bond programme set to be rolled out by September this year.