Kenya: Family Bank eyes buyouts in Africa expansion plan

Mid-tier lender, Family Bank, targets acquisitions including in financial technology firms (fintech) as part of expansion into the East and West Africa markets in an ambitious strategy to build its business.

The bank, with an asset base of Sh111.8 billion, said it is studying opportunities in markets such as Ghana, Liberia, Sierra Leone, and Ethiopia.

“We are currently carrying out a feasibility study in the larger eastern Africa and English-speaking western African countries. The objective is to come up with a country scorecard, identify opportunities within the countries that have an acceptable score, and develop a market entry plan, which will either be an acquisition of a commercial bank, deposit-taking microfinance institution or a leasing company or greenfield,” the bank’s chief financial officer(CFO), Mr Stephen Karumbi, told the Daily Nation.
Inorganic growth.

On the table of Family Bank’s options for inorganic growth is the acquisition of a fintech entity in the targeted markets. It says its objective will be either to acquire an entity and have its founders assume a significant minority position or have a joint venture arrangement.

“We’re looking for fintech, which will allow us to deliver financial services to the markets where we’re not available or we want to scale in. Fintechs who are market leaders through sustainable competitive or first-mover advantage.”

Initial public offering

“Fintechs with strong management teams and active value-adding co-investors or co-shareholders. Fintechs with proven business models with revenue traction that demonstrates commercial viability” the he added.

Family Bank plans to raise capital through an initial public offering, even as it remains non-committal on the timing.

Last June, the bank raised Sh4.42 billion shillings through a medium-term note whose subscription stood at 147.3 per cent.

“Listing the bank’s shares on the Nairobi Securities Exchange is still in our plans. We’re constantly reviewing the price-to-book multiples for listed banks to inform the right timing,” Mr Karumbi said.

The bank plans to venture into asset management through rollout of a money market fund product. It’s currently securing internal approvals. In the full year ended December 2021, Family Bank’s net earnings stood at Sh2.3 billion, up from Sh1.2 billion in 2020.