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Muya and allies free to sell their Family Bank shares on listing
Family Bank Founder Titus Muya addressing participants during Family Bank 40th anniversary Celebration, Commemorating Four decades of success and growth at Ulinzi Complex Grounds in Nairobi on November 29, 2024.
Family Bank founder Titus Muya and his associates will be free to sell their shares in the lender without restrictions once the company lists on the Nairobi Securities Exchange (NSE) on Tuesday next week.
This is because the top owners were exempted from the customary lock-in period of two years that is partly aimed at reassuring prospective investors that insiders are not looking for a quick exit.
The exemption will allow Mr Muya and his family to dilute their shareholding, currently at a combined 35.6 percent, to the Central Bank of Kenya (CBK) regulatory cap of 25 percent.
Compliance with the ownership limits is one of the key reasons for the bank’s listing by introduction — a process in which the firm will list its shares without raising new capital.
The Capital Markets Authority (CMA) requires controlling shareholders to hold on to their stake for at least two years after a listing by introduction to ensure entrepreneurs do not dump non-performing companies on the capital markets.
“The CMA has granted Family Bank an exemption from the requirement applicable to a listing by introduction under the Capital Markets Regulations, 2023, which requires controlling shareholders to provide an undertaking restricting the sale of part or the whole of their shareholding for 24 months following listing by introduction,” Family Bank said in its information memorandum.
“Accordingly, no lock-in undertaking will apply to Family Bank shareholders in connection with the proposed listing by introduction.”
CBK caps ownership of a bank by a person and their associates at 25 percent to improve corporate governance and mitigate self-dealing.
The CBK has currently extended a concession to the Muya family to hold a combined stake of up to 31.9 percent. The family’s actual ownership is 35.6 percent, meaning it could seek to offload a 3.7 percent stake to comply with the concession before later moving to full compliance.
Mr Muya and his associates have tried to dilute their stake in the bank previously by sitting out capital-raising ventures such as the private placement conducted last year, but the reduction has been slow.
The high ownership of the Muya family was cited negatively in a recent credit rating of the bank by South African ratings agency GCR Ratings.
The 35.6 percent shareholding of the Muya family is valued at Sh10.67 billion based on the listing price of Sh18 per share.
Mr Muya’s direct stake in the bank is disclosed at 4.42 percent. Daykio Plantations, a real estate company owned 91 percent by Mr Muya and nine percent by the Estate of Leah Wanjiru, owns 9.53 percent of the bank. This means Mr Muya’s control of the bank is 13.09 percent.
Persons associated with him include Brian Muyah, Ann Muya, Keriri Muya and Sheila Kahaki Muya, each holding a shareholding of 2.01 percent. The Estate of Rachel Njeri Muya is the second-largest shareholder of the bank with a stake of 10.05 percent.
Mr Muya’s allies also include Kenya Orient Life Assurance, which has a 2.13 percent holding, and its sister company, Kenya Orient Insurance, with a 0.09 percent stake.
Kenya Tea Development Agency Holdings Limited is the largest single shareholder in the bank with an 18.9 percent shareholding.
