Sidian Bank eyes SMEs with USD 12 Million Tier 2 Capital Injection from IFU

Kenya’s Sidian Bank said on Thursday it had received USD 12 million from The Investment Fund for Developing Countries (IFU), a Danish Development Finance Institution (DFI). A  deal that will see it grow the to Tier 2 status.

The funds are expected to boost the bank’s regulatory capital ratios as it works towards achieving its strategic objective of becoming a Tier 2 bank by 2022. The shareholders of the bank approved a rights issue of Ksh. 1.5 billion and a tier 2 capital raise of KSh 1.2 billion, which in combination will support growth of the bank’s assets by an additional Ksh. 10 billion to Ksh. 35 billion.

Dr. James Mworia, Chairman of the Board of Sidian Bank stated that “ 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. In addition, IFU will serve on the board of the bank, and we look forward to leveraging their breadth of experience in the financial services sector.  Centum Investment together with the other shareholders of Sidian Bank, continue to be committed to building a strong bank with robust governance structures that will support the drive to be the preferred bank for SMEs.”

The bank’s net loan book grew from KES 11.4 billion as at December 2017 to KES 13.1 billion as at 30th September 2018, and the Trade Finance portfolio recorded significant growth from KES 6.6 billion as at December 2017 to KES. 14.2 billion as at 30th September 2018, the bank is on track to being enlisted as a Tier 2 bank.

Mr. Morten Elkjaer, IFU Vice President, presiding over the agreement signing on behalf of IFU emphasized that: “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. Our investment in Sidian Bank is the first investment to unfold our new strategy to support more financial institutions with an SME focus”.

To further this growth, Sidian bank has begun targeting the digital savvy segment of its clientele and the unbanked sectors of its target market through an upgrade of its mobile banking platform that also incorporates mobile lending.