Africscan
Central Bank
Centum
Chege Thumbi
Formerly
IFU
Investment Fund for Developing Countries
K-Rep
Kenya
Nairobi
Rabai Power
Radisson Blu
Sidian
Sidian Bank
SME
The Sidian Bank
Thumbi

Danish fund injects Sh1.2b into Sidian

The Sidian Bank has received a much-needed Sh1.2 billion boost from Danish investment firm Investment Fund for Developing Countries (IFU).

The cash will come in handy in helping the lender raise its core capital eroded over the last two years of loss-making.

Formerly called K-Rep, the lender’s core capital declined from 23.1 per cent in 2016 to 13.9 per cent in the third quarter of last year.

Just last year, Sidian raised an extra Sh1.1 billion from its principal shareholder Centum, which owns a 73 per cent stake in the lender. IFU’s tier two capital will see it carve out about 20 per cent stake in the bank, making it the second largest shareholder in three years. “They are initially coming in as investors through tier two capital of Sh1.2 billion and it gives them entitlement to convert to shareholding within the stipulated time,” said Sidian Bank Chief Executive Chege Thumbi at a press briefing in Nairobi yesterday.

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“Once they convert, they will have a stake of slightly more than 20 per cent and together with Centum they will be the two main shareholders in Sidian Bank,” he added. The bank adds to IFU’s Kenya portfolio that includes Radisson Blu, Rabai Power plant and Africscan flower farm. The bank said the new funds would boost its regulatory capital ratios as it works towards achieving its strategic objective of becoming a tier 2 bank by 2022.

Shareholders approved a rights issue of Sh1.5 billion and a tier 2 capital raise of Sh1.2 billion, which in combination will support the growth of its assets by an additional Sh10 billion to Sh35 billion.

“The money is to help us to be able to do more business and not to address liquidity or anything like that. If you look at the capital adequacy of the Central Bank, for every shilling that you put in as a shareholder you can lend eight times,” said Mr Thumbi.

“So what this means is that with this capital now it’s quite significant to help us do more business to the SME’s micro-finance and corporates.”

The Sidian CEO said the lender’s growth had been significant, especially on the non-funded business, which moved from slightly below Sh7 billion to Sh16 billion.

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