Family Bank allowed to tap extra Sh1b from market
Capital Markets Authority (CMA) has granted approval to Family Bank to take up a green shoe option of Sh1 billion after the first tranche of its multicurrency bond was oversubscribed by 47.3 per cent.
The bond raised Sh4.42 billion against a Sh3 billion target in its first tranche of the corporate bond offer via private placement.
The first tranche comprised of Sh3 billion with an approved green shoe option of Sh1 billion was issued on June 8.
Wyckliffe Shamiah, CMA chief executive said the authority was encouraged by the performance of the bank’s medium term notes, which he described as instrumental in reviving the corporate bond market.
“We have therefore allowed the bank to take up from the investors the Sh3 billion that was approved for the first tranche, and the extra Sh1 billion offered by the same pool of investors, which is the green shoe option,” he said in a statement.
A greenshoe option is an over-allotment option which gives a entity offering shares to the public to sell to investors more shares than initially planned by the issuer when the demand proves higher than expected. In this case, it allows the lender to raise more money through the medium-term note.
Family Bank CEO Rebecca Mbithi thanked institutional and individual investors who believed in the institution and its vision as it seeks to increase lending to micro, small and medium enterprises, and strengthen its capital base as it heavily invests in technology.
The bank raised the cash from local fund managers, banks, retail investors, insurance companies and other institutional investors.
Churchill Ogutu, the lead researcher at investment banker Genghis Capital, who said unlike the corporate bonds market, “the stock of government bonds is way higher,” attracting monthly volumes worth Sh40 billion compared to Sh4 billion for corporate bonds.