Equity Bank Group chief executive officer James Mwangi PHOTO| FILE
What you need to know:
The long-term loan from the International Finance Corporation is aimed at shoring up the capital of its Kenyan banking subsidiary and lend to local small and medium-sized firms
Nairobi. Equity Bank is set to take a $100 million long-term loan from the International Finance Corporation (IFC) to shore up the capital of its Kenyan banking subsidiary and lend to local small and medium-sized firms.
IFC did not disclose the cost of the debt but noted that it will be subordinate–rank below other loans with regard to claims on the bank’s assets.
The transaction marks the international financier’s increased lending to local banks, with the institution having provided billions of shillings to companies such as Co-op Bank.
“The project consists of an up to $100 million (Ksh10 billion) subordinated loan to Equity Bank (Kenya) Limited to strengthen the bank’s regulatory capital and support its lending programme to the underserved micro, small and medium enterprises (MSMEs) segment in Kenya,” IFC said in its investments disclosures.
Part of the cash will also be used to support Equity’s financing of renewable energy projects. In addition to disbursing the loan, IFC will offer advisory services to the bank to strengthen its capacity to serve SMEs.
The global lender typically provides loans with an agreement that the funds will be used to lend to SMEs, women-owned firms and green energy projects as part of its social and environmental impact investing.
“The project is expected to have a catalytic effect on SME finance and sustainable energy finance in Kenya and attract more banks into these segments,” IFC said.
Firms that are expected to benefit from Equity’s onward lending of the IFC loan are those fitting the set criteria such as having between 10 and 300 employees or annual sales of Ksh10 million to Ksh1.5 billion.
