Family Bank Raises KES 8 Billion in Heavily Oversubscribed Private Placement, Bolstering Digital Leap and MSME Lending

Family Bank has successfully closed its private placement of ordinary shares, raising a remarkable Sh8 billion and significantly oversubscribing its initial Sh6.09 billion target by 131 percent. This substantial capital raise underscores a resounding vote of confidence from the investment community in the lender’s strategic direction, particularly its focus on digital transformation and inclusive banking across Kenya and the wider region.

The injection of additional equity is strategically earmarked to support the bank’s aggressive digital transformation programme, significantly boost its lending capacity, and fund business expansion in key target markets. This successful placement, which far exceeded expectations, positions Family Bank strongly to navigate the evolving regulatory landscape, including the Central Bank of Kenya’s (CBK) higher core capital requirements for commercial banks.

Chairman Lazarus Muema expressed profound satisfaction with the outcome, affirming that the overwhelming demand highlights the market’s trust in the bank’s stability and future vision. “This remarkable outcome is a resounding vote of confidence in Family Bank’s resilient business model, consistent profitability, and our unwavering commitment to serving the real economy,” Muema said. He added that the success reflects the market’s belief in the bank’s digital transformation journey and its “purpose-driven approach to inclusive banking.”

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The offering successfully attracted broad participation from a wide spectrum of investors, including pension funds, fund managers, insurers, corporates, and high-net-worth individual investors, reflecting what the bank described as exceptional confidence in its growth trajectory and long-term outlook. This diverse institutional backing suggests strong market alignment with Family Bank’s focus on high-growth segments of the Kenyan economy.

Chief Executive Officer Nancy Njau confirmed that the newly acquired capital will not only strengthen the lender’s balance sheet but also accelerate targeted lending to priority sectors. “The additional equity significantly bolsters our capital ratios and accelerates lending to priority sectors such as MSMEs, green financing, and women- and youth-led enterprises,” she stated. “This successful raise positions Family Bank strongly for sustained growth and enhanced shareholder value.”

The private placement was meticulously executed with Standard Investment Bank (SIB) serving as the lead transaction advisor and placement agent, working alongside Sterling Capital. This collaborative effort ensured the placement reached a broad and deep pool of institutional and sophisticated investors, guaranteeing the oversubscription.

Navigating the Capital Requirement Landscape

The Kenyan banking sector is undergoing a period of significant change, driven primarily by the Central Bank of Kenya’s (CBK) revised regulatory framework designed to enhance the resilience and stability of the financial system. A key component of this shift is the increase in the minimum core capital requirement for commercial banks, which is set to rise substantially to KES10 billion by December 2029. This mandate requires banks to comply gradually, starting with a minimum of KES 3.0 billion by the end of 2025, scaling up over the following years.

Family Bank’s successful KES 8 billion capital raise places it well ahead of the interim CBK minimums, significantly bolstering its core capital, which stood at KES 16.5 billion in the first half of 2025, demonstrating strong capital adequacy. The proactive measure of undertaking such a large placement now prepares the bank not only for future growth but also ensures it is comfortably positioned to meet the regulatory thresholds without strain.

The successful placement, achieved in a market still characterized by macroeconomic challenges—including inflation averaging 5–6% in 2025 and tight monetary policy—highlights the robustness of Family Bank’s offering. It also points to a broader trend where Kenyan banks are utilizing private placements and structured instruments to raise capital in an elevated interest rate environment, drawing strong participation from institutional investors seeking higher yields.

Strategic Pillar One: Digital Transformation and Operational Efficiency

A primary use of the newly raised Sh8 billion is to accelerate Family Bank’s digital transformation agenda. The bank has historically been a pioneer in digital innovation, being the first in Kenya to introduce paperless banking through smart card technology and the first in Africa to launch the mVisa service.

The current phase of digital transformation is focused on harnessing cutting-edge technology to enhance operational efficiency, elevate the customer experience, and mitigate risks, particularly IT and cyber risks. Significant investments are directed towards advanced digital banking solutions, data analytics, and automation tools aimed at streamlining internal processes and building customer-centric financial platforms. These initiatives are crucial for improving service delivery, reducing operating costs, and providing seamless, lower-fee services across multiple customer touchpoints.

Digital platforms currently handle over 90% of Family Bank’s transactions, reflecting the profound shift in customer behavior and the success of the bank’s non-branch channels, such as its PesaPap mobile banking service. The investment will enable the bank to further enhance its digital agility and security posture, crucial factors in maintaining customer trust and remaining competitive in a sector where Kenyan banks are increasingly going big on Artificial Intelligence (AI) for credit scoring, fraud detection, and customer service optimization.

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Strategic Pillar Two: Catalyzing Growth in Priority Sectors

The second, equally important strategic pillar is accelerating lending, particularly to sectors that drive real economic growth and inclusion. Family Bank has committed the fresh equity to boost lending to:

1. Micro, Small, and Medium Enterprises (MSMEs):

MSMEs constitute over 80 percent of Family Bank’s customer base and are considered the backbone of the Kenyan economy and major drivers of job creation. The bank’s ability to significantly expand its loan book to these entrepreneurs is critical. By the end of the first half of 2025, the bank’s loan book had already expanded by 10.4% to KES 100.9 billion, supported in part by recent funding partnerships with the European Investment Bank (EIB) and British International Investment (BII). The additional KES 8 billion equity capital provides the necessary leverage to sustain this double-digit loan growth, targeting small businesses in agriculture, trade, and manufacturing that often face difficulty accessing large-scale commercial credit.

2. Women and Youth-Led Enterprises:

Family Bank has demonstrated a strong commitment to closing the financing gap for demographic groups that are often underserved but possess high growth potential. The bank has established a specialized women-banking proposition dubbed ‘Queen Banking’, which includes a KES 50 billion kitty set aside over two years to cater to the diverse needs of women entrepreneurs. This initiative targets the fact that women form 49.7 percent of Kenya’s total labour force and own over 40 percent of micro and formal SMEs.

Furthermore, a recent financing partnership with EIB Global lined up Sh14.3 billion in total funding for SMEs, with at least 50 percent targeting businesses owned or run by women and a minimum of 30 percent extended to youth entrepreneurs. The successful private placement will complement these structured debt facilities, allowing Family Bank to offer holistic support, including unsecured loans, trade finance solutions, and capacity development through seminars and networking opportunities.

3. Green Financing:

In line with Kenya’s global commitments and the phasing in of climate-related disclosure frameworks for banks, the allocation towards green financing signifies a proactive approach to sustainable banking. This funding will target environmentally sustainable projects, including those in the renewable energy value chain and climate-resilient agriculture, such as hydroponics farming, supporting the transition towards a greener economy. The bank’s commitment is aligned with 13 of the 17 United Nations Sustainable Development Goals (SDGs), ensuring that its expansion is linked to creating a sustainable and inclusive future.

The Role of Market Intermediaries

The success of the private placement was heavily reliant on the expertise and market access provided by the transaction advisors. Standard Investment Bank (SIB), acting as the lead transaction advisor and placement agent, brings a robust track record in executing large, complex corporate transactions and possessing deep knowledge of the regional capital markets. SIB’s corporate finance team has been involved in over 70% of corporate advisory mandates in Kenya since 2005.

Working in tandem was Sterling Capital, a long-established investment firm licensed by the Capital Markets Authority (CMA) and a member of the Nairobi Securities Exchange (NSE). Sterling Capital’s expertise in equities and fixed income trading helped ensure broad institutional reach and efficient execution of the share placement, highlighting the maturity of Kenya’s capital markets ecosystem in handling large private equity deals.

Outlook and Future Market Positioning

The successful private placement represents a powerful catalyst for Family Bank’s long-term aspirations. Having significantly bolstered its capital base, the bank is strategically positioned to achieve its objective of moving into the Tier One Bank category within the Kenyan financial sector.

The bank’s shareholders have already approved its plan to list on the Nairobi Securities Exchange (NSE), with an expected timeline in 2026. This listing, which will occur by way of introduction rather than through an Initial Public Offering (IPO), will allow the existing shares to be freely traded. This move will unlock liquidity for the current investors who participated in the placement and will further solidify the bank’s visibility and governance standards in the public domain.

In a competitive banking environment where asset quality remains a concern, as reflected by the market weighted average Non-Performing Loan (NPL) ratio of listed banks increasing to 13.6% in the first half of 2025, Family Bank’s focus on prudent lending, coupled with its capital strength, provides a buffer against potential economic headwinds. The successful capital raise is a clear indication that, despite sector challenges, investors view Family Bank’s focused strategy on digital inclusion, MSME growth, and strong corporate governance as a recipe for sustained profitability and enhanced shareholder value well into the future.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

8th December, 2025