Family Bank is weighing new funding options after a weak rights issue performance last year, and has put an initial public offer (IPO) on the Nairobi Securities Exchange (NSE) on the table.
The lender, which has largely courted the public markets over the years, received subscriptions totalling only Sh252 million from the cash call, falling far short of its target of Sh9.3 billion after freezing the stock sale to key shareholders.
Family Bank says it is currently eyeing private placements from institutional investors and high net worth individuals before firming up on its listing approach.
Should the lender meets its funding requirements through the placements, Family Bank says it will opt for a listing by introduction, as its main goal in floating its shares on the NSE is to make its stock more tradable.
Listing by introduction refers to the process of floating a company’s existing shares on a stock exchange without raising new capital.
“Listing has always been on the cards. We want to list because we want to improve liquidity for our existing shareholders. Some of our shareholders are big while others are small. We want to improve the tradability of what they have,” said Family Bank chairman Lazarus Muema.
The lender had offered its shareholders 643.5 million new shares at a cost of Sh14.50 a piece, at a ratio of one extra share for every two held.
The lender had hoped to use the proceeds from the rights issue to fund its regional growth and new lending.
Family Bank, however, says the rights issue excluded its largest shareholders as a deliberate move to diversify its shareholder base.
“The rights issue had two main aims, to raise capital and dilute main shareholders by bringing new shareholders,” added Mr Muema.
“It was a deliberate decision to achieve a high level of diversity in the shareholding and also for compliance reasons.”
First quarter profit
On Wednesday, Family Bank announced a 15.3 percent rise in net profit for the first three months of the year, rising to Sh1.05 billion from Sh910 million previously.
The higher profitability in the first quarter of 2025 was attributed to higher non-interest income, which was up by 41.6 percent to Sh1.7 billion from Sh1.2 billion.
Family Bank’s profitability was also lifted by a 33.3 percent rise in net interest income to Sh3.2 billion from Sh2.4 billion a year earlier.
Total interest income was higher by 22.7 percent to Sh5.4 billion from Sh4.4 billion, underlining the bank’s ability to squeeze higher lending margins from borrowers as interest expenses grew slower by 10 percent to Sh2.2 billion.
The lender’s total operating expenses rose by 41.6 percent to Sh3.4 billion from Sh2.4 billion in March 2024 on higher rental charges, directors’ emoluments, staff costs and loan loss provision costs.
Family Bank’s largest shareholder is the Muya family, who hold a total stake of 18 percent through Daykio Plantations Limited and shares held by businessman Titus Kiondo Muya.
The Kenya Tea Development Agency Holding Ltd (KTDA) holds a 16.4 percent stake, while the family of the late Rachael Njeri holds 12.9 percent.
Family Bank has key partners who could potentially infuse new capital in the lender, including British International Investment (BII), BlueOchard Impact Investment Managers and the European Investment Bank (EIB).
Market value
The lender ended the first three months of the year to March with a market value of Sh24 billion based on its prevailing share price of Sh18.7 in the over-the-counter (OTC) market.
Family Bank says it is actively engaging with private institutional investors and high net worth individuals to inject new capital.
The lender is plans to expand into the region through mergers and acquisitions once it has additional capital as it races to not only become a tier I bank in Kenya, but also a Pan-African bank.
Last year, Family Bank shareholders approved the lender to form a non-operating holding company to oversee regional expansion activities.
