European development finance institutions Proparco (French) and DEG (German) are set to raise their stakes in I&M Holdings from the current 10.68 per cent in an upcoming rights issue by the banking group.
The funds will be given an opportunity to inject more funds into the business in the Sh1.5 billion cash call that will be offered in three installments.
“The stake of the DFIs could go up in the capital raise,” said Gauri Gupta, the I&M general manager for corporate advisory.
Their actual stake will depend on the uptake of the rights issue whose timing will also determine if the funds will still be shareholders in the Nairobi Securities Exchange-listed firm.
UK development finance institution CDC Group has received regulatory approvals to buy all the shares held by DEG and Proparco in I&M.
If the buyout is completed before the cash call, it is CDC which will be seeking to raise its stake from the 10.68 per cent it will have acquired from the two funds.
I&M is to raise Sh750 million from ordinary shareholders who will be offered new shares at a price that was yet to be determined as of Friday.
Another Sh600 million is to be raised specifically from the development finance institutions (DFI), giving them an extra investment opportunity that is expected to raise their ownership in the company.
“Issue of new shares to DFI shareholder/(s) on such terms and conditions as may be determined by the directors for up to an amount not exceeding 40 per cent being Sh600 million of the entire proposed capital raise amount,” I&M said in a notice ahead of its recent extraordinary general meeting.
The company will also seek to raise Sh150 million from trustees of its employee share ownership plan (ESOP).
The fundraising comes at a time when I&M is keen expanding its business in the region through acquisitions and greenfield ventures.
I&M recently sought shareholders’ approval to empower the board of directors to authorise an acquisition, a merger, a joint venture or a new venture whose value does not exceed 15 per cent of the company’s total assets.
The company recently acquired a 65 per cent stake in corporate advisory firm Burbidge Capital and is on course to complete its full buyout of Giro Commercial Bank.
I&M had also planned to buy an 80 per cent stake in Uganda’s Orient Bank but the deal collapsed after the owners, Nigeria’s Keystone Bank, opted to sell to London-based private equity firm 8 Miles LLP.