Sh3.5bn Consolidated Bank investor to become top owner

The strategic investor who injects Sh3.5 billion into Consolidated Bank through purchase of preference shares will eventually own a controlling stake in the lender by convert them into equity, toppling government from top ownership.

CEO Thomas Kiyai in a Friday interview said a local or international investor is likely to inject the cash by March, setting the Treasury-owned bank on a privatisation path.

“We will structure the transaction in such a manner that the preference shares will be converted at some point in time to enable the investor take controlling shareholding,” said Mr Kiyai.

“We are confident that by end of this first quarter we will have somebody on board. We look forward to identifying someone who will be willing to commit themselves to that cause.”

The conversion will see the shareholder dilute the Treasury’s stake, which currently stands at 85.8 per cent. The shareholder will also have voting rights as opposed to ordinary preference shares.

The window for potential investors to express interest shuts this Wednesday, but the CEO hinted at extending the period for a few days to accommodate investors who have requested for more time.

Once the bidding closes, evaluation will follow, allowing select investors to review due diligence report and other corporate documents before making final commitments.

According to Mr Kiyai, the investor will pump in the money in tranches, eventually helping the bank to lift its capital base to be in compliance with Central Bank of Kenya (CBK) ratios. It has been in breach of at least three regulatory metrics for four years.

In addition, the money will help the bank to grow its loan portfolio by up to Sh25 billion within the medium term. As at end of September, its loan book was only Sh7.9 billion, meaning the fresh capital will more than triple this.

“This increased scale, combined with expected overall growth in the balance sheet will transform our operational performances,” said Mr Kiyai.

In March, the Privatization Commission opened a tender for consultancy services leading to the privatization of the lender.

The CEO says that sealing the deal with a strategic investor will quicken the process.

In nine months ended September, it booked a loss of Sh404.8 million, a worse position than the Sh301.5 million loss recorded in a similar previous period.