Kenya's KCB gets cash call go-ahead to fund lending and expansion
29 April 2016, 22:01
Nairobi (Reuters) - Kenya's KCB Group, the country's biggest lender by assets, said on Friday it had won shareholder approval to issue new shares and raise cash, allowing it to increase lending to customers and make acquisitions.
Joshua Oigara, KCB's chief executive said he expected the group to set the price of the 10 billion shilling ($99 million) rights issue in the next week or so. The funds will be used to support the balance sheet and to lend more, he added.
"Between now and the next quarter, we should be able to have raised the funds. It is not a lot of money for KCB to raise in the market," he told reporters after the firm's annual meeting.
"We engaged our large shareholders and they are very much in support of the rights issue," he said.
Oigara said the bank, which also operates in Uganda, Tanzania, Rwanda, Burundi and South Sudan, would also use some of the additional shares in its ambition to grow in Kenya through an acquisition.
"KCB will look at expansion differently this time around. It is not just going to be using funds or capital to acquire. It is a mixture of using shares we have created today to build an acquisition structure which is much better," he said, citing a potential share swap.
The bank was appointed by the central bank to manage mid-sized Chase Bank, when it was re-opened on Wednesday, following a three-week closure. It has the option of buying a majority stake in Chase after it conducts due diligence.
The central bank had given KCB a year to manage Chase before making up its mind about acquiring a stake, but Oigara said they may be able to reach that decision sooner.
"Things have gone much smoother than I thought," he said of the re-opening of Chase, under KCB's management.
"We have one year to look at Chase Bank. We think it will be much shorter. It could maybe take six months."