SME lender Jamii Bora Bank Limited’s bid to raise up to 500 million Kenyan shillings in additional capital through a rights issue is underway, with the exercise set to close this month.
The new rights issue follows an approval by shareholders during the April 28, 2017 annual general meeting to increase nominal capital byKES 5 billion through a combination of a rights issue, convertible debt and strategic investors. The rights issue is a private placement.
“We expect to raise KES 500 million, as part of our efforts to strengthen our capital base to support business growth” said Group Chief Executive Officer, Sam Kimani.
Catalyst Fund I, managed by Catalyst Principal Partners LLC, Cornerstone Enterprises and Asterisks Holdings Limited, who are significant shareholders in the bank, have committed to take up over 55% of the rights.
During April’s AGM, shareholders approved the creation of 30 million new ordinary shares and mandated the board of directors to increase paid up capital to the desired level within a five-year period.
“It is important for us to increase our capital base in line with shareholder approval to give us capacity to grow our loan book and increase customer deposits while also meeting our statutory ratios. Part of the proceeds will also be invested in our new subsidiary, Jamii Bora Leasing Limited (JBLL),” added Kimani.
Kimani said JBLL was incorporated in 2016 to provide leasing solutions to the bank’s target market adding that it represents JBB’s response to existing needs among small to medium enterprises which could not afford expensiveassets necessary for their business operations.
“JBLL, not registered and governed by the Banking Act, has pricing flexibility to tailor products to meet requirements of its borrowers and consequently becoming an important revenue earner for the group.”
In 2016, JBB attracted over Kes.1.2 billion in convertible debt from two private equity funds; Shore cap II Ltd. (Equator Capital) and Progression Capital. Shore Cap II, a US-based investment fund, converted their portion of Kes.600 million into equity in 2016 for a 15% stake in the bank. Consequently, the fund reserves a seat on the bank’s board of directors as a significant shareholder. The bank has raised over Kes.2 billion through previous rights issues since 2012.
JBB’s strategic positioning as an enterprise bank gives it unique capabilities to support small and medium enterprises throughout their trade cycle by financing their needs from bid bonds through to bank guarantees and invoice discounting.
“Our tailor-made trade finance solutions are geared towards empowering small to medium enterprises to conduct businesses and prosper without being curtailed by temporary cash-flow needs,” said the CEO.
The ongoing rights issue opened on May 31, 2017 and will close at the end of June.