Family Bank is seeking to raise Sh1.25 billion from its shareholders to boost its capital base to enable it lend to huge clients and fund infrastructure projects.
The bank which currently has a capital base of Sh3.3 billion can only lend to small customers because of regulatory requirements. A bank is allowed to lend as much as 25 per cent of its core capital.
"It will help us to increase our loan book and the type of customers that we go for," said Wilfred Kiboro, the bank's chairman. The bank is also hoping to be able to attract more deposits as it opens more branches and roll out agency banking in areas where it has no presence.
"This is going to be a very rapid level of growth," Kiboro said adding that four new branches will be opened in the next few months. The bank has a branch network of 67 and 100 ATMs.
The rights issue is priced at Sh31 and will be available for existing shareholders in a ratio of one for every six shares held. The issue opened yesterday and will be on offer for the next one month up to December 7.
The new shares, totaling 40.5 million, will starting trading among shareholders in the so-called over the counter market mid January next year.
It also emerged that the International Finance Corporation, the private sector arm of the World Bank, might be interested in investing in Family Bank.
"We have been looking at Family Bank to invest in this country," said Jimnah Mbaru, board member of an IFC committe that is helping recapitalisation of banks in Africa.
The bank is also scouting for international and local strategic investors, chief executive Peter Munyiri said. The bank is also targeting to raise more funds through an initial public offer in the next few years.