KENYA – Sidian Bank has secured US$12 million (Sh1.2 billion) from The Investment Fund for Developing Countries (IFU), a Danish Development Finance Institution (DFI) in tier II capital financing.
According to a Business Day report, the fresh round of funding will help the company strengthen its regulatory capital ratios and support its lending abilities.
The Tier 2 capital injection is part of the bank’s broader initiative to grow the bank to Tier 2 status by 2022.
Sidian bank chairman James Mworia said the funds will also be used to grow SME loan book, trade finance portfolio and mobile lending.
“This is a major vote of confidence in Sidian Bank and its strategic initiatives by an institutional investor with significant investments in financial services companies across the globe,” said Mr Mworia.
“The funding will be utilised in supporting the bank’s growth in risk assets, including the loan book, building on the bank’s demonstrated success in utilisation of previously raised capital.”
Speaking on the investment, IFU Vice President Morten Elkjaer said the deal is the first investment in financial services sector and deepens the fund’s presence in Kenya.
The Denmark based firm, IFU focuses on investments in the form of equity and loans with a goal to contribute to social and economic development in the countries.
“We believe this will help increase access to finance that can spur growth of SMEs and contribute to sustainable development and jobs in Kenya by providing effective and timely financial services,” said Mr Elkjaer.
For Sidian Bank, which has reported decline in revenues expects the investment to boost liquidity position of the bank including ease of access to funding, financial backing and fast turn-around times for SME customers.
The bank’s net loan book grew from Sh11.4 billion as at December 2017 to Sh13.1 billion as at 30th September 2018, and the Trade Finance portfolio recorded significant growth from Sh6.6 billion as at December 2017 to Sh14.2 billion as at 30th September 2018.
Centum Investments which acquired majority stake in the bank in November 2014, recently injected Sh1.1 billion.