Chase Bank seeks to raise Ksh10bn through a bond

Chase Bank Kenya today launched its Ksh10 billion medium term multi-currency note programme.

The launch paves the way for the bank to raise additional capital to strengthen its capital base and support its strategic initiatives.  The Note will be issued in several tranches with the first tranche in Kenya shillings.

The bank intends to raise Ksh3 billion from the first tranche with a green shoe option of Ksh2 billion. A green shoe Option is a clause contained in the bond underwriting agreement that allows the bank as the issuer to take up an additional Ksh2 billion if the initial Ksh3 billion is oversubscribed. With a coupon of 13.1%, the issue is the highest yielding of several corporate bonds issued over the last two years.

 “The issue will go a long way in maintaining the bank’s pace of growth,” Chase Bank CEO Paul Njaga said.

Proceeds will be used to strengthen the bank’s core capital, support lending to its key target segments SMEs, Youth, Women, and Agri business. It will also be used to finance expansion of the branch network, investment in IT and product development initiatives.7

Chairman of the bank, Mr. Zafrullah Khan, said Chase is celebrating 20 years of existence and impressive growth. Total Assets of the bank grew by 36% to Ksh119.5 billion in Quarter 1 2015 compared to a similar period in 2014, while profit after tax rose 47% to Ksh634Million over the same period.

Genghis Capital Investment Bank, an associate company of Chase Bank, is the Lead Transaction Adviser and co-placing agent while NIC Capital is the Co-Arranger and Co-Placing Agent for the issue.

Mr Samy Ghannam, Associate Director for Corporate Finance at Genghis Capital said that the bond is being issued at a time of high investor interest and confidence in corporate bonds. Current yields are sustainable in light of the long-term domestic macroeconomic environment factors. In addition, by having a multi-currency programme the bank will also be in a position to leverage from the success of Kenya’s debut Eurobond which saw high subscription levels.