Sidian Bank will be raising Sh500 million of new capital this month, in the last leg of a Sh3 billion rights issue approved by shareholders to support the lender's growth.
The bank's shareholders injected Sh600 million early this year which followed a Sh1.9 billion capital raising drive that was concluded late last year.
Sidian’s fundraising comes as it seeks to remain compliant with statutory capital requirements which are pegged on a lender’s size of business.
Shareholders, who include Centum Investment Company, Pioneer General Insurance and construction company Wizpro Enterprises Limited, have put in Sh2.5 billion new capital so far.
“We have raised Sh2.5 billion out of the Sh3 billion. The balance, Sh500 million will be raised this month (June),” said Chege Thumbi, the chief executive of Sidian Bank.
The bank had targeted to raise Sh1.5 billion last year but three of its shareholders gave it Sh1.9 billion leaving it to raise Sh1.1 billion in the remaining tranches.
“The board and shareholders approved a rights issue to raise additional capital of Sh3 billion to support business growth in line with the bank’s medium-term strategy 2024-2028,” said the bank in its annual report.
Sidian's shareholding structure changed after the first round of capital raising with shareholding of Centum, held under Bakki Holdco Limited, diluted to 29.2 percent at the end of December 2024 from 40 percent a year earlier after it sat out the cash call.
Pioneer General was diluted to 18.13 percent from 24.8 percent and its sister company Pioneer Life Investments down to 3.28 percent from 4.49 percent over the same period. Those who grew their stakes were Afram Limited, to 21.4 percent from 7.9 percent, and Wizpro Enterprises Limited to 24.2 percent from 7.9 percent.
Sidian has ambitions of being a tier 2 bank in the medium term. A tier 2 bank needs to have at least one percent market share in the banking sector based on a weighted scale that factors in total assets, customer deposits, number of deposit and loans accounts.
Customer deposits held by Sidian rose 61.8 percent to Sh50.2 billion in the 12 months ended March 2024. Its loan book grew at 5.4 percent to Sh26.2 billion over the same period with the bulk of new customer deposits held with it invested in state securities.
Sidian saw its net profits grow 3.5 times to Sh523 million in the three months to March this year compared to a similar period in 2024 --a time when most lenders reported flat or declining earnings.
Injection of the new Sh500 million capital will help Sidian sustain the growth trajectory that the lender has charted in the last two years.
As per regulatory requirements bank shareholders have to put in a shilling of their own for every Sh12.5 they collect from the public in a ratio dubbed core capital to total deposit liabilities.
Sidian’s core capital to total deposits ratio as at end of March 2025 was 12.1 percent, being 4.1 percentage points above minimum requirement.
Its core capital to total risk weighted assets ratio was 12.2 percent against a minimum requirement of 10.5 percent giving it a 1.7 percentage points headroom.
