Family Bank founder Titus Muya and his associates recorded a gain of Sh4.74 billion on their holdings in the lender after its share price jumped by 44 percent in its first day of trading at the Nairobi Securities Exchange (NSE) on Tuesday.
The bank listed 1.662 billion shares on the bourse by introduction at an entry price of Sh18 per share, before closing the day at Sh26.
Mr Muya and his associates, who include family members, Daykio Plantation Ltd, Kenya Orient Life Assurance and Kenya Orient Insurance, currently hold a combined 35.67 percent stake in the bank, equivalent to 593.03 million shares.
The value of this holding rose from Sh10.67 billion to Sh15.42 billion as a result of the Sh8 gain, making the family one of the biggest beneficiaries of the price discovery from the listing.
Companies usually list on the bourse in order to achieve price discovery for their shareholders, while also unlocking liquidity for those looking to buy more or sell their units. Family Bank has previously traded on the less liquid over-the-counter (OTC) market since 2006.
The bank said ahead of the listing that various valuation methods priced its shares as high as Sh43.06 apiece, but it decided to list the stocks at a discount to align with the multiples at which other listed banks are trading at.
“As a board, we have always supported listing as it enhances the bank’s profile, strengthens corporate governance, and provides greater liquidity for our shareholders,” said Family Bank chairman Lazarus Muema during a bell-ringing ceremony at the NSE on Tuesday.
“Over the last five years, we have closely monitored the price-to-book multiples of listed banks to determine the optimal timing. We are therefore pleased to have reached this milestone and are confident that this will create long-term value for our shareholders.”
Overall, Family Bank’s market capitalisation —the measure of investor wealth— jumped from Sh29.9 billion to Sh43.23 billion on the day. A total of 1.87 million shares were traded, resulting in a turnover of Sh48.6 million.
A select number of investors, however, made higher returns as the share touched an intra-day high of Sh50 in early trades, giving those who sold at this price a gain of 178 percent relative to the stock’s listing price.
Mr Muya, who founded the bank in 1984 as a building society before marshalling it to full commercial bank status in 2007, directly holds 4.42 percent or 73.4 million shares of the lender, now valued at Sh1.9 billion at yesterday’s closing price.
Various members of his family and their estates directly hold 324.29 million shares valued at Sh8.43 billion, while Daykio Plantation has 158.46 million units valued at Sh4.12 billion.
Kenya Orient Life Assurance –which is associated with Mr Muya— holds a 2.13 percent stake or 35.34 million shares valued at Sh918.9 million, while Kenya Orient Insurance has a 0.09 percent stake or 1.5 million shares, valued at Sh39 million.
The Kenya Tea Development Agency (Holdings) Ltd is the biggest single shareholder in the bank with an 18.98 percent stake equivalent to 315.63 million shares. The value of these shares rose to Sh8.2 billion from Sh5.68 billion as a result of the share price gain on Tuesday.
Family Bank’s anchor shareholders have also been exempted from the customary two-year lock-in period for new listings by introduction, giving them freedom to sell their shares and realise some of the gains.
Mr Muya and his associates are expected to sell part of their holdings, mainly to comply with the ownership limits applicable in the banking sector.
The CBK caps the ownership in a bank by a person and their associates at 25 percent to improve corporate governance and mitigate self-dealing.
The regulator has currently extended a concession to the Muya family and associates to hold a combined stake of up to 31.93 percent, meaning they could seek to offload a 3.74 percent stake to comply with the concession before later moving to full compliance.
Family Bank is now the 12th lender to be listed on the NSE, and the first addition on the segment since Rwanda’s BK Group cross-listed on the bourse in 2018. It is also the first new listing by a Kenyan bank since the entry of I&M Group in June 2013.
