Family Bank will consider bringing in a strategic investor in future as it looks to diversify its shareholder base and help lower its founders’ effective stake to meet the regulatory cap of 25 percent.
The bank said in an information memorandum ahead of its listing that it was coming into the market with a relatively concentrated shareholder structure, which calls for efforts to broaden and free more units into its free-float pool.
The bank went public by introduction last Tuesday, listing 1.662 billion shares at a price of Sh18 each. Its disclosures showed that 59.5 percent of its issued shares were collectively held by associates of its founder, Titus Muya, the Kenya Tea Development Authority (KTDA) and an unnamed investor through a nominee account.
The KTDA is the single largest shareholder in the bank at 18.98 percent or 315.63 million shares. Mr Muya and his associates, who include family members and corporate entities Daykio Plantation Ltd, Kenya Orient Life Assurance and Kenya Orient Insurance, have a 35.67 percent holding equivalent to 593 million shares.
“Family Bank has a relatively concentrated shareholding structure, which may limit the number of shares available for trading and allow significant shareholders to exert substantial influence over corporate decisions,” said the bank in the information memorandum.
“Over time, the bank will pursue strategies aimed at broadening and diversifying its shareholder base, including, but not limited to, the onboarding of a strategic investor, subject to regulatory approvals, prevailing market conditions, and the bank’s strategic objectives.”
Family Bank added that it will continue to uphold strong corporate governance standards, including independent board representation and protection of minority shareholder rights.
To diversify the shareholder base, the lender has the option of either issuing more shares to a strategic buyer or having key owners sell a portion of their units to the investor.
Family Bank’s anchor shareholders have also been exempted from the customary two-year lock-in period, giving them freedom to sell their shares on the open market and bring down their stakes, and realise some of the gains after listing.
The bank’s share closed the week at a price of Sh24.50 per unit on Friday, giving its holders a paper gain of 36 percent in the stock’s first week of trading on the NSE.
At the time of listing, Family Bank had 1.662 billion issued shares, drawn from a pool of 2.3 billion authorised shares.
Bringing in a strategic investor by allocating part of the unissued shares would allow the lender to raise additional core capital, but would have the effect of diluting all other shareholders. On the other hand, a sale of a stake by one of the existing owners would not dilute the other shareholders.
Last year, the bank did a private placement, which realised Sh8 billion from accepted applications of 552.05 million shares, although some of these units have yet to be issued as some of the investors await vetting by the Central Bank of Kenya (CBK).
By December 31, 2025, it had only issued 357.45 million shares to investors from whom it received Sh5.18 billion in the issue, leaving a balance of 194.59 million units valued at Sh2.82 billion to be allotted upon receiving the CBK nod.
The lender’s issued shares will, therefore, grow to 1.85 billion from the current 1.662 billion once all the shares are allotted.
The private placement helped the KTDA acquire an additional 103.4 million shares in the bank, while bringing in new shareholders such as Kenya Orient Life Assurance.
For Mr Muya and his associates, the need to comply with the law on ownership limits means that they will likely sell down their stake at some point in the future.
The CBK caps the ownership in a bank by a person and his associates at 25 percent to improve corporate governance and mitigate self-dealing.
The regulator has currently extended a concession to the Muya family to hold a combined stake of up to 31.93 percent. Given that the family’s actual ownership is 35.67 percent, they could seek offload a 3.74 percent stake to comply with the concession before later moving to full compliance.
Scaling down their ownership to 25 percent would mean selling up to 128.7 million shares, assuming the pending private placement shares are fully allotted.
