Kenyan Bank Jamii Bora Seeks Investor as it Considers Listing

NAIROBI, Kenya, Capital Markets in Africa: Jamii Bora Bank Ltd., a Kenyan micro-lender, has begun the search for a strategic investor to inject 3 billion shillings ($29.6 million) to fund its expansion as it considers listing on the domestic stock market, Chief Executive Officer Sam Kimani said.

The bank is courting private-equity investors and other lenders as potential investors, Kimani said June 21 in an interview in the capital, Nairobi. In April, the company raised 1.2 billion shillings from Chicago, Illinois-based Equator Capital Partners LLC and Progression Capital Africa Ltd. of Mauritius that will be converted into equity stakes of 8 percent each in September.

“We want to use that money for technology and for expansion” Kimani said.

Kenya’s Treasury is tightening the industry’s minimum core-capital requirements to 5 billion shillings by 2019, five times the current requirement, a move that might encourage consolidation after the collapse of three lenders over the past year. The $61 billion economy is over-banked, with 42 lenders serving more than 40 million people, compared with 22 banks in Nigeria, which has a population of 180 million and gross domestic product that is nine times bigger, according to Cytonn Investments Management Limited, a Nairobi-based money manager.

Higher core capital will create “stronger banks,” Kimani said. Jamii Bora currently has 2.5 billion shillings in core capital.

Jamii Bora has ambitions to become a mid-tier bank by the end of 2018, before listing on the Nairobi Securities Exchange, Kimani said. Kenya uses a weighted composite index that includes net assets, deposits, capital and reserves to rank its banks. Mid-tier lenders have a weighted index of 1 percent to 5 percent, while large banks are 5 percent and above. Jamii Bora is among 21 lenders classified as small, according to the Central Bank of Kenya.

Source: Bloomberg Business News