Family Bank is looking to raise Sh10 billion from a rights issue for regional expansion, following a shareholders approval.

The tier one lender will offer up to 800 million new shares through the rights issue. This will increase its issued authorised Ordinary Shares from  1,500,000,000 to 2,300,000,000.

According to the lender, the capital raise will be achieved through a mix of a rights issue and from new shareholders via a private placement.  

The funds raised will go towards strengthening the bank’s capital base, for local and regional growth plans, driving investments in IT infrastructure and new product initiatives and supporting onward lending activities.

“Through this capital raise, we are positioning the bank for the next phase of growth which will position the bank as a choice bank for our existing and potential clients through customer-first service delivery not only in Kenya but also in the region,” said Family Bank CEO Rebecca Mbithi.

The rights issue opens on October 19 and closes on November 30. 

During the annual general meeting on June 28 Mbithi informed the shareholders that the lender was planning to raise $100 million.

The plan involved investigating potential merger and acquisition prospects with a focus on regional expansion.

The bank said the rights issue will supplement the capital-raising process, having previously stated in May that it was considering a private placement.

As at the end of December 2022, Daykio Plantations Limited (12.3 percent), Titus Kiondo Muya(5.7 percent),the estate of Rachael Njeri(12.98 percent) and Kenya Tea Development Agency Holding (16.5 percent) were the bank's main shareholders.

The top ten shareholders had 64.94 percent of the shares, with the remaining shareholders holding roughly 35.1 percent.

Th fundraiser comes at a time that the Groups’ Net Earnings fell to Sh1.4 billion for the six-month period ended June 30,2023, compared to Sh1.6 billion in the first half of the 2022 financial year, a decline of 12.5 percent.

Pre-Tax Profit also declined to Sh2 billion in first half 2023 from Sh 2.3 billion at the end of the six-month period ended June 2022.

The Group’s interest income rose by 18.7 percent to Sh7.3 billion supported by increased lending to customers across all business segments and placements with other banking institutions.