Private equity firm Catalyst buys stake in Jamii Bora Bank

November 6, 2014


Private equity firm Catalyst Principle Partners has bought a stake in Jamii Bora Bank for an undisclosed fee.

The small-tier bank created new shares to accommodate the PE fund in a deal that will help it raise its core capital and ultimately boost lending.

“It’s a minority investment, but quite a significant one for the fund. We have looked at the banking industry and identified Jamii Bora as one of the players we think is going to create an impact in the market,” said Catalyst chief executive Paul Kavuma.

Catalyst did not disclose the stake or deal value, but it normally invests between $5 million (Sh445 million) and $20 million (Sh1.78 billion). Mr Kavuma said Jamii Bora has strengthened its management and operation systems, setting it on a path to higher profitability.

The bank, formerly City Finance Bank, has posted profits for the past two years after being in the red since 2005. Its net profit for the half-year ended June stood at Sh43.28 million, compared to Sh42.69 million in the same period last year.

Jamii Bora’s majority shareholders comprise of Asterisk Holdings Limited with 24.5 per cent, Jamii Bora Scandinavia AB (JBSAB) of Sweden with 24.2 per cent, and Nordic Microcap Investment which holds 12.2 per cent.

The bank’s managing director Samuel Kimani and chief commercial officer Timothy Kabiru are listed as directors of Asterisk, which in December 2011 invested Sh320 million into the bank.

Mr Kimani and Mr Kabiru joined the bank from KCB Group in 2011 and started a restructuring plan that is changing the lender’s business model from its initial target of the low end of the market to include other products like home loans, corporate banking and forex trading.

The Jamii Bora deal is Catalyst’s second investment in a Kenyan firm this year, following its debt and equity investment in September in retail drugs store chain Mimosa Pharmacy.

Catalyst invests in companies for between four and six years before exiting. It has also invested in Tanzanian personal healthcare manufacturer ChemiCotex, Ethiopian water bottling company Yes Brands, Tanzanian logistics and heavy equipment renting company EFFCO and Chai Bora, a tea packer in Kenya and Tanzania.

The lender floated a five-year Sh1 billion bond last year with a 13.3 per cent coupon rate. In June, the bank’s shareholders approved the conversion of the bond into shares and also ratified a proposal to issue five million new stocks through a cash call.

Investors holding at least Sh400 million worth of Jamii Bora’s corporate bond have already committed to convert their interest into shares, equivalent to 40 per cent of the lender’s targeted amount.

The funds injection would increase Jamii Bora’s core capital to Sh2.4 billion and allow the bank to grow lending to small and mid-sized enterprises and invest in technology driven channels such as Internet and mobile banking. Source: Business Daily Africa