Corporate News
By HERBLING DAVID, hdavid@ke.nationmedia.com
In Summary
Centum
has acquired an additional 8.1 per cent stake in Sidian Bank after
investing Sh1.2 billion in the lender’s recent rights issue that was
sidestepped by some of its co-investors in the company.
The move saw the investment firm’s interest in the bank,
which rebranded from K-Rep, rise to 74 per cent from the previous 65.88
per cent.
Centum took up its rights and that of some of the
minority owners who failed to provide their share of new capital in the
transaction.
“Some minority shareholders did not take up their
rights in full and therefore Centum’s stake increased,” said Fred
Murimi, managing director at Centum Capital, in an interview.
The increased investment comes at a time when the
banking industry is set to register a significant decline in
profitability on the implementation of a new law capping interest rates
at four percentage points above the Central Bank of Kenya’s base rate.
Mr Murimi declined to reveal the identity of the
small owners who stayed out of the rights issue and hence whose stake
has been diluted.
K-Rep Group — an investment vehicle for the bank’s
founders — now has 17.1 per cent stake in Sidian Bank. The founders
initially had a 19.74 per cent holding in the lender.
KWA Multi-Purpose Co-operative Society currently
owns 4.9 per cent of Sidian Bank, down from 6.14 per cent when Centum
was buying into the bank.
The investment firm owns Sidian Bank through a non-operating holding company dubbed Bakki Holdco Ltd.
The share purchases have firmed Centum’s grip on
the bank and deepens the investment firm’s presence in Kenya’s financial
services industry.
Centum’s current portfolio in the sector includes a
35.6 per cent stake in Platinum Credit, a non-deposit taking
microfinance, GenAfrica Asset Managers (73 per cent shareholding), and
wholly-owned Nabo Capital, a licensed fund manager. The firm recently
exited insurance firm UAP Holdings and insurance broker AON Kenya.
Funds raised in the rights issue will help shore up
capital ratios, increase lending, revamp core banking IT software, as
well as investments in technology channels such as internet banking and
mobile banking.
Sidian is ranked 22nd in size out of Kenya’s 40
operational banks, with 69,000 deposit accounts and 8,000 loan accounts —
giving it a cumulative market share of 0.6 per cent according to latest
Central Bank of Kenya data.
Centum in July 2014 offered Sh2.5 billion to buy
65.9 per cent of K-Rep, effectively pricing the tier-three bank at about
Sh3.8 billion.
Those who were bought out of K-Rep by Centum include
International Finance Corporation which had a 15.18 per cent stake,
African Development Bank (21.98 per cent), South Shore Bank of Chicago
(10.86 per cent), Netherlands Development Finance Company with 6.59 per
cent.
The IFC — World Bank’s private sector lending arm — raked in
Sh500 million from the deal, earning a lucrative seven-fold return from
its initial $1 million (Sh86.7 million) investment in K-Rep in 2011.
Sidian’s half-year net profit dipped by a third to
Sh158.2 million as at June, bogged down by surging interest expenses,
and higher provisions for bad debts.
The bank loaned out Sh390 million between March and
June this year, mostly to its target market of small and micro
enterprises. Its loan book closed at Sh13.3 billion as at June
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