Bloomberg News

I&M Bank of Kenya Plans Fundraising for Regional Expansion (1)

June 14, 2013

I&M Bank Ltd., the Kenyan lender that begins trading on the nation’s stock exchange this month, plans to raise money in the next year to fund its regional expansion, Chief Executive Officer Arun Mathur said.

The bank, based in Nairobi, plans to begin operations in Uganda within 12 months, possibly by acquiring an existing lender, before venturing into South Sudan and Zambia, Executive Director Sarit Raja-Shah said in an interview. I&M already operates in Tanzania, Rwanda and Mauritius.

“We are still thinking of how to raise money,” Mathur, 59, said. He said the company has not yet determined how much it plans to raise. “There could be a rights issue, there could be an issue of debt and equity” carried out by July 2014, he said.

Profit increased by 21 percent at banks in Kenya last year to 107.9 billion shillings ($1.26 billion), helped by a surge in interest income after the central bank raised its benchmark rate to a record. Total assets grew 15 percent to 2.33 trillion shillings, according to central bank data. Earnings may grow further this year as East Africa’s biggest economy is forecast to expand 5.8 percent, the fastest pace in six years.

With 41 other banks operating in Kenya, including Equity Bank Ltd. and Kenya Commercial Bank Ltd., the two largest by market value, I&M is expanding regionally as the industry becomes more competitive, Mathur said.

‘Potential Acquisitions’

“We have been looking at potential acquisitions in Uganda,” Raja-Shah said. “If we don’t find the right fit with our strategy, then we will definitely be looking at going for a fresh license.”

I&M Holdings Ltd., the bank’s parent company, begins trading on the Nairobi Securities Exchange on June 25. The holding company was known as City Trust Holdings Ltd. before a capital restructuring aimed at improving the liquidity of its stock, Mathur said. City Trust is being renamed I&M Holdings.

Once regulatory approvals from Rwanda, Tanzania and Mauritius have been received, I&M Bank’s operations in the three nations will also become units of I&M Holdings, Mathur said.

Before the transaction, City Trust owned 7.3 percent of I&M Bank and had 601 shareholders, while the lender had 113 stockholders. One of the biggest shareholders of the holding company is Biashara Securities Ltd. with a stake of 13.9 percent. The French Development Agency and the German Investment & Development Co. hold a combined 10.7 percent, individual investors have 16.3 percent.

Main Market

I&M Holdings “will move to the main market segment from the alternative investment market segment” of the Nairobi Securities Exchange (NSEASI), Mathur said.

Shares of the company are expected to begin trading at 89.6 shillings following a five-for-one share split, according to offer documents from City Trust.

I&M Bank has 20 outlets in Kenya and plans to open five more this year, Mathur said. It has 24 cash machines, he said.

City Trust’s loss in the six months through January widened to 1.85 million shillings compared with 333,263 shillings a year earlier, while in the first three months of this year, I&M Bank’s net income slipped to 938.8 million shillings from 955.6 million shillings, the company said.

Mathur declined to provide any earnings forecasts beyond saying this year will be “better than last year.”

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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